1975 (1) TMI 18 - HC - Income Tax

Summary

Issues Involved:
1. Legality and propriety of the Tribunal's order allowing registration of the firm.
2. Interpretation of the term "along with its return of income" in proviso (ii) to section 184(7) of the Income-tax Act, 1961.
3. Impact of the 1970 amendment to section 184(7) on the interpretation of the provision.

Summary:

1. Legality and Propriety of Tribunal's Order:
The Tribunal allowed the registration of the firm despite the declaration u/s 184(7) being filed late. The Tribunal held that the appeal concerning the status of the assessee was maintainable and that renewal could not be refused merely because the declaration was not submitted along with the return. The Tribunal concluded that the firm should be assessed as a registered firm for the year under appeal.

2. Interpretation of "Along with its Return of Income":
The court examined whether the term "along with its return of income" in proviso (ii) to section 184(7) is mandatory or directory. The court held that the term is merely directory, meaning that the declaration need not be physically attached to the return but must be before the assessing authority at the time of assessment. The court emphasized that the legislative intent was to ensure that the declaration and return are both available to the Income-tax Officer during the assessment process, not necessarily submitted simultaneously.

3. Impact of the 1970 Amendment:
The court considered the amendment introduced by the Taxation Laws (Amendment) Act, 1970, which allowed the Income-tax Officer to condone delays in filing the declaration. The court concluded that the amendment reinforced the view that the pre-amendment provision did not specify a rigid time limit for submitting the declaration. The amendment provided greater flexibility but did not alter the fundamental interpretation that the declaration need only be before the assessing authority at the time of assessment.

Conclusion:
The court answered the question in the affirmative, holding that the Tribunal's order allowing the continuance of the firm's registration was legal and proper. The question was answered in favor of the assessee and against the department, with no costs awarded to the assessee.