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Issues: Registration of firm under section 26A of the Indian Income-tax Act, 1922.
Analysis: The judgment delivered by the High Court of Kerala pertains to a reference by the Income-tax Appellate Tribunal regarding the refusal of registration of a firm for the assessment year 1960-61. The key issue was whether the firm was justified in seeking registration under section 26A of the Income-tax Act. The deed of partnership in question was dated March 1, 1959, but the stamp paper for the deed was purchased only on March 23, 1959. The Appellate Tribunal concluded that the deed could not have been executed before the purchase of the stamp paper, casting doubt on the validity of the partnership creation. The court referred to Section 26A of the Income-tax Act, which requires the factual existence of the partnership during the entire accounting year, either under an oral agreement or a written instrument specifying individual shares of the partners. The court highlighted that in this case, it was uncertain if the partnership existed throughout the accounting period from April 1, 1959, to March 31, 1960. The deed of partnership was executed between March 23, 1959, and April 29, 1959, with no specific date established. As the exact date of partnership creation was unknown, and the application mentioned a date different from the actual creation date, the court affirmed the refusal of registration by the Income-tax Officer. The court distinguished cases where partnerships created orally were subsequently documented from the present case where the partnership creation and documentation were simultaneous. Citing precedents, the court emphasized the necessity of the partnership's factual existence throughout the accounting year for registration eligibility. As the partnership might not have been in existence for the entire accounting period, the court ruled against the assessee and in favor of the department, upholding the decision to deny registration. The judgment was concluded without any order as to costs, and a copy was to be sent to the Appellate Tribunal as per legal requirements.
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