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Issues:
- Whether the Income Tax Appellate Tribunal (ITAT) was correct in upholding the orders of the Appellate Assistant Commissioner (AAC) regarding the registration of a partnership firm despite the partnership deed being initially understamped. Analysis: The case involved a dispute over the registration of a partnership deed that was executed on insufficient stamp paper. The assessee filed an application for registration along with the deed, which was rejected by the Income Tax Officer (ITO) due to the understamping. The AAC accepted the deed after the assessee rectified the deficiency in stamp duty. The Department appealed to the Tribunal, arguing that rectification would only validate the deed from the date of rectification. However, the Tribunal held that once the deed is properly stamped and admitted in evidence, it is effective from the date of execution, not rectification. The High Court examined the relevant provisions of the Income Tax Act and the Karnataka Stamp Act. It noted that the requirements for registration were fulfilled by the assessee, except for the stamp duty issue. Referring to the Karnataka Stamp Act, the Court highlighted provisions stating that once deficient stamp duty is paid, the instrument can be treated as duly stamped and admitted in evidence. Citing the Hindustan Steel Ltd. v. Dilip Construction Co. case, the Court emphasized that once an instrument is admitted in evidence after rectification, it can be acted upon as if it had been duly stamped. Based on these principles, the Court concluded that the partnership deed could be acted upon from the date of execution, even though the stamp duty deficiency was rectified later. Therefore, the Court upheld the ITAT's decision in favor of the assessee, answering the question referred in the affirmative and against the Revenue.
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