1973 (11) TMI 24 - HC - Income Tax

1961 Act, Act Of 1922, Act Of 1961, Application For Registration, Change In Constitution Of Firm, Firm Registration, Income Tax Act

Summary

Issues Involved:
1. Validity of the application for registration made in Form No. 11A on September 29, 1962.
2. Applicability of Section 184(7) of the Income-tax Act, 1961.
3. Interpretation of Section 297(2)(k) of the Income-tax Act, 1961.
4. Procedural requirements under the Income-tax Act, 1922 and Income-tax Act, 1961 for registration of firms.

Issue-wise Detailed Analysis:

1. Validity of the application for registration made in Form No. 11A on September 29, 1962:
The court examined whether the application for registration filed by the assessee on September 29, 1962, in Form No. 11A was validly refused. The firm, originally constituted in 1943, had undergone changes in its constitution over the years. The assessee first filed an application on April 19, 1962, under the 1922 Act, but later filed another application on September 29, 1962, under the 1961 Act. The Income-tax Officer refused the registration, considering it a case covered by Section 184(7) of the 1961 Act, which required a declaration in Form 12. The court held that the application in Form 11A was a good and valid application and should not have been rejected.

2. Applicability of Section 184(7) of the Income-tax Act, 1961:
The court analyzed whether the case fell under Section 184(7) of the 1961 Act, which deals with the continuance of registration for subsequent assessment years if there is no change in the constitution of the firm or the shares of the partners. The court concluded that the registration granted under the 1922 Act could not automatically continue under the 1961 Act for the assessment year 1962-63. Therefore, an application for registration under the 1961 Act was necessary for that year. The court emphasized that the application filed in Form 11A was appropriate and not a case for continuance under Section 184(7).

3. Interpretation of Section 297(2)(k) of the Income-tax Act, 1961:
The Tribunal had relied on Section 297(2)(k) to argue that the renewal of registration under the 1922 Act should be deemed as registration under the 1961 Act. The court rejected this interpretation, stating that the renewal of registration under the 1922 Act does not equate to an order or recognition under the 1961 Act. The court clarified that Section 297(2)(k) pertains to agreements, appointments, approvals, and other administrative actions, not to the registration of firms.

4. Procedural requirements under the Income-tax Act, 1922 and Income-tax Act, 1961 for registration of firms:
The court compared the procedural requirements for registration under both the 1922 Act and the 1961 Act. Under the 1922 Act, registration was an annual process requiring renewal each year. The 1961 Act introduced a different scheme where once registration is granted, it continues for subsequent years unless there is a change in the firm's constitution. The court noted that the assessee's application in Form 11A was in compliance with the requirements of the 1961 Act, considering the change in the constitution of the firm.

Conclusion:
The court answered the referred question in the negative, holding that the application for registration made in Form 11A on September 29, 1962, was not validly refused. The court emphasized that the application was in accordance with the 1961 Act and the relevant rules. Consequently, the court ruled in favor of the assessee and against the revenue, with no order as to costs of the reference.