1985 (8) TMI 4 - SC - Income Tax

Neither the deed of partnership was signed by partner nor was the application for registration in accordance with the rules. Therefore, the firm was not entitled to registration under s. 26A of the Indian I.T. Act, 1922. The law enjoins that the deed of partnership must be signed personally by each partner - the registration of the firm has rightly been refused

Summary

Issues:
1. Registration of the firm under the Indian I.T. Act, 1922 was refused.
2. Validity of the registration application and partnership deed.
3. Compliance with the essential conditions for firm registration.
4. Interpretation of the rules regarding registration under the I.T. Act.

Analysis:
The Supreme Court addressed the issue of the registration of a firm under the Indian I.T. Act, 1922, which was initially refused. The case involved a partnership formed by 11 partners, including one who was away in the United States during the application process. The Tribunal found that the firm was not genuine as one partner had not signed the application, and the application did not comply with the rules. The High Court, however, believed that the absent partner had accepted the firm's existence and should have been given another opportunity to prove it. The Supreme Court referred to the conditions for firm registration laid down in previous cases, emphasizing the need for the partnership deed to be signed by all partners and the application to be submitted within the specified timeframe.

Furthermore, the Court highlighted the requirements of the I.T. Rules, 1922, stating that the application for registration must be made within six months of the firm's constitution or before the end of the previous year. Since these conditions were not met in this case, the Supreme Court agreed with the Tribunal's decision to refuse registration. The Court cited precedents to support the position that each partner must personally sign the partnership deed, and the application must adhere to the specified timeline. Ultimately, the Supreme Court held that the firm was not entitled to registration under the I.T. Act, and the High Court's decision was overturned.

In conclusion, the Supreme Court allowed the appeals, restoring the Tribunal's decision to refuse registration of the firm. The appellant was awarded costs for the appeals, and the judgment emphasized the importance of strict compliance with the rules and conditions for firm registration under the Indian I.T. Act, 1922.