1973 (4) TMI 3 - SC - Income Tax

Whether the assessee-firm is entitled to registration under section 26A - subsequent alteration of one of the terms of the deed eventhough was valid would not validate the application for gegistration - appeal of assessee is dismissed

Summary

Issues:
Whether the assessee-firm is entitled to registration under section 26A of the Indian Income-tax Act, 1922.

Analysis:
The case involved appeals regarding the registration of an assessee-firm under section 26A of the Indian Income-tax Act, 1922. The firm was constituted under a partnership deed dated February 5, 1955, with five partners, one of whom was a minor. The partnership deed specified equal profit and loss sharing among partners. The application for registration was made on June 30, 1955, and the firm was registered on January 10, 1956, after addressing objections raised by the Registrar of Firms regarding the minor partner's involvement. However, the Commissioner of Income-tax later set aside the registration, deeming the partnership ab initio void due to the minor partner's presence and unfavorable terms in the deed.

The High Court and the Tribunal affirmed the Commissioner's decision, stating the partnership was not legally valid. The Supreme Court agreed, emphasizing that the applications for registration and renewal did not meet the legal requirements. The Court highlighted that the partnership deed's subsequent alteration could not validate the registration application, especially as it was made after the prescribed deadline. The Court also noted non-compliance with rules regarding the minor partner's share representation in the applications.

The Court referred to relevant sections and rules under the Act, emphasizing strict compliance with section 26A and related rules for registration benefits. Precedents were cited to support the requirement of adherence to statutory provisions for claiming registration benefits. The Court rejected arguments for substantial compliance with rules and emphasized the need for strict adherence to statutory requirements.

The Court dismissed appeals, upholding the decisions that the applications did not conform to legal requirements for registration. The Court directed each party to bear its own costs. The judgment underscores the importance of strict compliance with statutory provisions for claiming benefits under section 26A of the Income-tax Act.