1960 (8) TMI 96 - HC - Income Tax

Summary

Issues Involved:
1. Timeliness of the application for renewal of registration.
2. Completeness and correctness of the application form.
3. Compliance with the requirements of paragraph 3 regarding the division of profits or losses.

Issue-wise Detailed Analysis:

1. Timeliness of the Application for Renewal of Registration:

The Tribunal dismissed the appeal on the ground that the application was barred by time. The relevant rule was changed on November 20, 1952, requiring that an initial application for registration "shall for any year of assessment up to and including the assessment for the year ending on March 31, 1953, be made before February 28, 1953." The Tribunal incorrectly held that the application should have been made before June 30, 1952, or at the latest before November 20, 1952, when the rule was altered. The court clarified that it was not possible for the assessee to have filed the return before November 20, 1952, and since the application was filed on February 20, 1953, it was within the time specified by the amended rule.

2. Completeness and Correctness of the Application Form:

The Tribunal found the application incomplete because paragraph 2 of the form, which required the date of the registration of the instrument of partnership for the previous assessment year, was not filled in. The court noted that the order of registration for the assessment year 1951-52 was made on June 11, 1953, and the applicant could not have furnished this date in an application made on February 20, 1953. The court concluded that the failure to complete paragraph 2 did not justify the conclusion that the form was incorrect or incomplete, as the earlier application was ordered in favor of the assessee on June 11, 1953.

3. Compliance with the Requirements of Paragraph 3 Regarding the Division of Profits or Losses:

The more substantial question was whether the application was defective due to non-compliance with paragraph 3, which required certification that the profits (or loss) of the previous year were divided or credited. The Tribunal and the department held that the profits or losses of a continuing firm must have been actually divided or credited before the application for renewal was made. The court agreed, stating that the rule specifically required this for continuing firms and that this requirement was not met in this case. The court emphasized that registration under section 26-A of the Act confers a statutory privilege, and firms must strictly conform to the requirements prescribed by the rules to seek this privilege. The court found that the application was incomplete in material particulars because the profits or losses had not been divided or credited as required.

Conclusion:

The court answered the question in the affirmative and against the assessee, upholding the Tribunal's decision that the application for renewal of registration was invalid due to non-compliance with the rules. The court acknowledged the potential difficulties and individual hardships in working out the rule but emphasized that it is for the rule-making authority to amend the rules, not for the court to rectify by interpretation.