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TMI Blog2013 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. Income-tax Authority cannot question the change in the constitution of the firm. Thus ITAT was right in directing the directing registration to the firm for the assessment year 1980-81 - Question referred is answered in affirmative i.e. against the Department and in favour of the respondent. - Income Tax Reference No.-140 of 1987 - - - Dated:- 18-3-2013 - Prakash Krishna And Ram Surat Ram (Maurya), JJ. SSC Shambhu Chopra Pramod Kumar Jain JUDGMENT 1. At the instance of the Commissioner of Income Tax, Agra, the Income Tax Appellate Tribunal, 'B' Bench, New Delhi (hereinafter referred to as the Tribunal) has referred the following question, for opinion to this Court, under Section 256 of the Income Tax Act, 1961 (hereinafter referred to as the Act):- "Whether on the facts and in the circumstances of the case, the Tribunal was right in reading the Partnership deed of 24.05.1974 and the Memorandum of 06.02.1980 together and, on what basis, in maintaining the order of the Commissioner (A) directing registration to the firm for the assessment year 1980-81?" 2. The facts giving-rise to this reference are that M/S Alison Singh Company, 174, Baluganj, Agra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners were not according to the term of the deed dated 24.05.1974 as such registration of the firm was liable to be refused. On these findings registration was refused by order dated 22.10.1983. The respondent filed appeals (registered as CIT (A) 137, 138/IAC(A)/Agra/1983-84) from the aforesaid order. The appeal was heard by the Commissioner of Income-tax (Appeals), Jaipur House, Agra, who by order dated 31.12.1984 held that on examining the conduct of the partners right from June 1976 and application Form 11 for the Assessment Year 1977-78, affidavit of H.N. Sinha, filed along with it, Income-tax clearance certificate issued in June 1978, it was proved that all the partners were through out sharing the profits/loss as (1) Mrs. Zohra Jabeen-40% (2) Mahendra Pratap Singh- 20% (3) H.N. Sinha- 20% and (4) Smt. Nirmala Singh-20%. The memorandum dated 06.02.1980 is in the nature of a revised deed, changing the ratio of the shares of the partners and is admissible under Section 187 (2) (b) of the Act, for that purpose the partners had filed Form No. 11-A. Accordingly it was held that share of the partners were shown in the ratio as given in the revised deed, which was through out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in the business was not mentioned, as such deed dated 06.02.1980 was executed and signed by all the partners in order to rectify this mistake. All the partners admitted that they were sharing profit/loss of the business in the ratio of their capital investment in the business through out which was also proved by producing the previous income-tax records. Thus the deed dated 06.02.1980 is only a rectification deed. Even otherwise also the partners can change terms and conditions under the law. Since deed dated 06.02.1980 is a rectification deed and has been executed according to real agreement between the partners, which is proved from their previous record as such objection of the IAC that the deed would have no retrospective effect, is not liable to be accepted. 6. Now we have to examine the provisions relating to the registration of firm under the Income Tax Act, which was in existence at the relevant time. Relevant portions of Section 184 and 185 of the Act are extracted below:- Section 184- Application for registration:- (1) An application for registration of a firm for the purposes of this Act may be made to the Income-Tax Officer on behalf of any firm, if - (i)t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the firm furnishes, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that where the Income Tax Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration which the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made. (8) Where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section. Section 185- Procedure on receipt of registration: (1) On receipt of an application for the registration of a firm, the Income Tax Officer shall inquire into the genuineness of the firm and its constitution as specified in the instrument of partnership, add - (a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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