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TMI Blog2000 (7) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for the years from 1980-81 to 1983-84 on February 24, 1986, and for the assessment year 1984-85 on August 29, 1989, respectively, and assigned the status of registered firm to the assessees. The net income computed has been allocated among the partners of the assessee-firm as per the assessment order. Thereafter, it was found that the partnership came into effect on July 1, 1980, with the capital of the partnership consisting only of cash contribution and there is no schedule of the property to the partnership deed to indicate that the land from which agricultural income is derived has become partnership property. The Commissioner of Agricultural Income-tax found that the firm does not hold land within the meaning of section 2(nn) of the Tamil Nadu Agricultural Income-tax Act, 1955. The matter was taken on suo motu revision under section 34 of the Act by the Commissioner of Agricultural Income-tax. Show-cause notices in S.M.R.P. 8 and 9 to 12 of 1989 dated February 20, 1989, were issued to the partners of the firms to explain as to why the assessment made for the assessment years 1980-81 to 1984-85 assigning the status as "registered firm" should not be cancelled. The Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court have laid down the correct proposition of law, particularly, the law laid down in Graham's case [1973] 91 ITR 412 (Mad), is very much in consonance with the provisions contained in the Act and is holding the field for more than a quarter century and hence it required no reconsideration. The decisions relied on by the referring Division Bench for coming to the conclusion that the decision of the earlier two Division Benches are not reflecting the correct legal position, are all decisions rendered under the Indian Incometax Act while considering the provisions contained in the said Act and, as such, they are not of any assistance in deciding the issue. Mr. Haza Nazeeruddeen, the learned Special Government Pleader (Taxes) appearing on behalf of the Revenue, strongly supported the view expressed by the Division Bench in the reference order and submits that in the absence of any holding of the land by the firm, it is not entitled for any registration. In rejoinder, Mr. Janarthana Raja, appearing for the assessee, has submitted that in the instant case, the partnership was entered into for joint management with a view to ensure efficiency, economy and convenience and with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of firms and the Schedule to the Act was also suitably substituted by Act 40 of 1991. Hence, as on date, the question to be resolved in this revision is only academic. Learned counsel also referred to rule 17 and Form No. IV with particular reference to the particulars to be stated in the form as to the constitution of the firm at the date of filing of the application, and he drew our attention to the prescriptions contained as A and B and note (1) and (2) embedded to the Schedule to Form No. IV and submits that the relevant provisions, rules and the form prescribed thereunder as stated above do not prescribe a condition precedent to own or hold property for getting the firm registered. If that be so, there is no reason to differ from the statutory prescription to get the firm assessed as a registered firm. To support this submission, learned counsel strongly relied on the definition contained in the last part of section 2(q). This section says that "person" means any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own behalf and partly for another, either as owner, trustee, receiver, common manager, admini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm, if any partner is a person not resident in the State. What is emphasised in section 17(5) is that whether the firm owns property of its own or holds property on behalf of any one or all, the total income of each partner of the firm has to be assessed. Then comes section 27 of the Act, which provides the procedure for registration of firms. There are two sub-sections to this section. As per sub-section (1), application may be made to the Agricultural Income-tax Officer on behalf of a firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration and sub-section (2) provides for the procedure and details which the application made by the firm shall contain. Rules have also been framed under the Act for making the application for registration. If the conditions in the above two sub-sections are fulfilled, the firm is entitled to get registration. In the instant case, the instrument of partnership specifying individual shares is filed and an application to that effect has been made. The argument of learned counsel has some substance as nothing has been mentioned in the section that the firm should own land or hold propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he registration will have no effect. The cases on hand are pertaining to assessment years prior to the amendment Act. Thus, in our opinion, holding of property or owning land is not a pre-requisite condition for registration of the firm under the Act. An earlier Division Bench of this court in Graham and Brothers v. State of Madras [1973] 91 ITR 412 wherein four brothers were divided in status and also partitioned, while answering the question whether a firm is liable to be assessed to agricultural income-tax in respect of the agricultural income derived by it, held as follows : "The definition of 'person' in section 2(q) of the Madras Agricultural Income-tax Act, 1955, which is an inclusive one, has not made holding or owning of property by a firm as a condition for treating the firm as an assessable entity under the Act, in contradistinction with the main part of the definition in which owning and holding property either as owner, trustee, receiver or common manager, administrator or executor or in any capacity recognised by law is essential. Owning of property by the partnership is not a condition precedent for the existence of the firm and hence a firm is liable to be asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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