1969 (10) TMI 14 - HC - Income Tax

Application for registration was not filed before the close of the previous year an application for condoning delay was filed - tribunal only has power to entertain an application made after the end of the previous year and to excuse the delay in presenting the application - Tribunal was not right in law in directing registration of the assessee-firm

Summary

Issues:
Registration of unregistered firm for assessment year 1964-65 under Income-tax Act of 1961.

Analysis:
The case involves the registration of an unregistered firm of lawyers for the assessment year 1964-65 under the Income-tax Act of 1961. The firm, Joseph & George, applied for registration after the close of the previous year due to the illness of a partner. The Income-tax Officer excused the delay but did not register the firm, stating that the partnership document was not in force during the relevant accounting year. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal held that the firm should be registered since the delay in filing the application was excused. The main issue was whether the partnership document needed to be in force during the accounting year for registration.

The counsel for the revenue relied on the Supreme Court decisions in R. C. Mitter & Sons v. Commissioner of Income-tax and N. T. Patel & Co. v. Commissioner of Income-tax, which emphasized that the partnership document should be in force during the accounting year. On the other hand, the counsel for the assessee argued that the change in language from the old Act to the new Act implied a different interpretation. The Supreme Court in Mitter's case held that a partnership constituted under an instrument need not have its origin in the document itself, and the partnership need not be created by the document.

The court analyzed the relevant provisions of the old Act and the new Act, emphasizing that the document of partnership must be operative during the accounting year for registration. The court noted that the change in language from the old Act to the new Act did not alter the effect of the Supreme Court ruling in Mitter's case. The court concluded that the document need not be operative throughout the year but should be in force on the day the application for registration is made.

The court clarified that the power of the Income-tax Officer was only to excuse the delay in filing the application for registration, not in drawing up the partnership document itself. The court answered the question referred in the negative, stating that the Appellate Tribunal was not right in law in directing the registration of the assessee-firm for the assessment year 1964-65. The judgment highlights the importance of the partnership document being in force during the accounting year for registration under the Income-tax Act of 1961.