1978 (1) TMI 67 - HC - Income Tax

A Partner, Application For Registration, Change In Constitution Of Firm, Firm Consisting, One Partner, Two Partners

Summary

Issues:
Registration of firm - Continuation of registration for assessment years 1968-69 and 1969-70 - Change in constitution of firm due to partner's presumed death.

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, regarding the continuation of registration for the assessment years 1968-69 and 1969-70. The dispute arose when one of the partners of the firm, Shyamdhan Sett, went missing and was presumed dead. The Income-tax Officer denied registration for the assessment year 1967-68 due to Shyamdhan Sett's disappearance. However, the Appellate Assistant Commissioner granted registration for 1967-68 and continuation for 1968-69 and 1969-70. The revenue challenged the continuation of registration for the latter years, arguing a change in the firm's constitution due to Shyamdhan Sett's presumed death.

The Tribunal, citing relevant legal provisions, held that a change in the constitution of the firm occurred due to the partner's presumed death, rendering the firm ineligible for continued registration. The appointment of an administrator-pendente lite further indicated the firm's altered status. The Tribunal also noted a defect in the application for registration, emphasizing the Supreme Court's stance on strict compliance with legal requirements for such applications.

The court analyzed the provisions of section 184 and 187 of the Income-tax Act, emphasizing the conditions for registration continuation and the definition of a change in the firm's constitution. It referred to precedents like Sandersons & Morgans case and the Full Bench decision in Addl. Commissioner of Income-tax v. Vinayaka Cinema to support the view that a firm must remain unchanged as an entity throughout the relevant period. The court concluded that the firm's altered status, coupled with the defective application, justified the Tribunal's decision to deny continuation of registration for the assessment years in question.

In conclusion, the High Court affirmed the Tribunal's decision, ruling in favor of the revenue. The judges concurred on the affirmative answer to the referred question, indicating that the firm was not entitled to the continuation of registration for the assessment years 1968-69 and 1969-70.