9911796707
TMI Blog1994 (11) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer, it was the assessee who carried on wholesale business in sarees, the income of which was diverted to the trust M/s K.C. Dilip Kumar Pvt. Family Specific Trust. The learned CIT(A) on the other hand was of the view that the profits earned were not distributed in accordance with the constitution so specified in the deed of partnership. This was for the reason that the income shown in the hands of the trust was held to belong to the assessee-firm. Another reason stated for disallowing the claim of registration was that the part of the profits was not divided or credited in the manner shown in the Application Form No. 11. This was supported by the decision of the Supreme Court in the case of Khanjan Lal Sevak Ram vs. CIT (1972) 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee whereas the other cases cited are distinguishable. In the circumstances, there is no merit in the arguments of the learned authorised representative that the assessee's claim for registration was wrongly rejected. Various decisions were relied upon. 4. We have considered the rival submissions. Examining the assessee's claim under the 1961 Act, we find that a firm may be assessed as registered or to be treated as unregistered one. An application for registration is to be made under s. 184 and the procedure to be followed on receipt of application, is contained in s. 185 of the Act. As per the provisions prevailing at the relevant point of time, the essential conditions are: (a) an application to be made on behalf of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as shown in the Schedule and that the information given above and in the Schedule is correct. *Note: Where the application is made after the end of the previous year, the words 'upto the date of this application' must be deleted." Similar certificate was prescribed in paragraph 3 of the form of application for registration prescribed under r. 3 of the IT Rules, 1922. From the above it is clear that the certificate to be given by the firm is that the profits or loss, if any, is divided or credited as shown in the Schedule. The Schedule in turn contains 7 columns out of which the 6th column which is relevant reads as under: "Share in the balance of profits or loss" "Percentage". This apparently refers to the profits/loss wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm had been divided or credited in the manner shown in the application, the assessee was not entitled to renewal of registration. This was for the reason that it did not comply with the conditions prescribed in paragraph 3 of r. 6. While holding so, it was also held that the reason behind r. 6 was that at the relevant time the registered firm was not taxable and only the partners of the firm could be taxed. If a portion of the profits earned by the firm was not divided amongst the partners or credited to their accounts to that extent, the profits earned by the firm escaped assessment and as such the claim for renewal of registration could not be accepted. While holding so they allayed the apprehension of the learned authorised represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts it was held by their Lordships of Allahabad High Court that the certificate given in cl. 3 of the application was incorrect which was deliberate and dishonest on the part of the assessee. Accordingly the claim of the registration was refused. As against this, we find that in the case of CIT vs. Chander Bhan Hari Chand Co. (1980) 126 ITR 709 (Del) their Lordships of Delhi High Court have held that even if some partners had made secret profits without the knowledge of the others, the firm was entitled to the certificate of continuance of registration under s. 184(7). It must also be found that the other partners have assented to such a distribution. Though the decision pertains to the provisions of s. 184(7), the ratio is relevant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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