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TMI Blog1966 (4) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... 955 : The assessee filed the application before the Income- tax Officer for registration of the partnership under the Income-tax Act. (4)20-10-1955 : The assessee filed before the Registrar of Firms a statement under section 58 of the Partnership Act (Act No. IX of 1932). The Income-tax Officer, in his order dated March 23, 1961, on the application, for certain reasons, concluded that the application for registration was sent to the Registrar only on November 1, 1955. That conclusion is wrong. For, the assessee filed a statement (certificate) from the Registrar of Partner ships that the statement of the assessee under section 58 reached him on October 20, 1955. Both sides argued on the basis that the statement was filed on October 20, 1955, which is the correct date. (5)26-10-1955 : The firm closed its books for profit and loss. This was the last date of the previous year for the purpose of rule 2. (6)2-11-1955 : The Registrar of Firms filed the statement of the assessee and made entries in the register of firms. (7)23-3-1961 : The Income-tax Officer passed an order refusing to register the application for various reasons, one of which was that the application was not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee has raised the same contentions. For convenience, the contention can be split into two contentions as urged by him : (1)That the effective date of registration of the firm under the Partner ship Act is October 20, 1955. (2)That the application to the Income-tax Officer is governed by rule 2(b) and was in time as the assessee presented it before October 26, 1955. The fact that it was presented before October 20, 1955, i.e., the date on which the firm became a registered firm under the Partnership Act, was not material. Contention No. 1.-Sections 58 and 59 of the Partnership Act run as follows: 58. (1) Application for registration.-The registration of a firm may be effected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the firm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee stating . . . 59. Registration.-When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement. It is bey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catch-words. In Maxwell on The Interpretation of Statutes (eleventh edition, 1962), it has been stated as follows (at pages 42-43) : Nevertheless, it has been said, they (marginal notes) are not to be taken as parts of the statute. 'I do not think I am entitled to have regard to the (marginal note) in interpreting a statute, and I disregard it on that ground.' But, as regards marginal notes, this rule has not always been observed. For the purpose of interpretation a marginal note was used . . . . saying : 'Some help will be derived from the side-note (though of course it is not part of the statute), which shows that the section is dealing with (certain matters)'. In Partnership Law in India and Pakistan by K.M. Ghosh (2nd edition, 1955), the following statement is extracted from the report of the Special Committee which had been appointed by the Government of India to examine the provisions of the Bill before it became passed by the Central Legislature as the Partnership Act (at page 536): Clause 58 (corresponding to section 59).-In connection with this clause and with the succeeding clauses two points should be noted : (1)The Registrar is a me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertified copy of an entry relating to a firm in the register of firms may be produced in proof of the fact of the Registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein. Section 68(2) only lays down a rule of evidence based on the fact that the Registrar, as a responsible officer of the Government, entrusted with the duty of maintaining a true and faithful record as a recording officer would accordingly make a record in the register of firms which was a Government record. The provision in section 68(1) that a person is bound by the contents of the statement which he delivers to the Registrar is also a rule of evidence. This does not alter the nature of the act involved in the Registrar acting under sections 59 and 60, etc. Thus, rule 21 of the Civil Rules of Practice runs as follows : All plaints . . . may be presented to or filed in court by delivering the same personally to the chief ministerial officer of the court at any time during the office hours. The said officer shall at once endorse on the document the date of presentation and, if proceedings are thereby instituted, shall insert the serial number. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in a few particulars only, and to use the Partnership Act, 1890, with some degree of freedom. Nevertheless, the Bill does not alter in any substantial way the English law of partnership or the Indian law of partnership, which is based thereon. The main principles are the same, and likewise all important details. The deviations in principle it does show are on minor points, and have been introduced in order to adopt the law to Indian conditions or to supplement it in places where it is incomplete, or are supported by the views of authoritative commentators. In the Limited Partnership Act, 1907, section 8 corresponding to section 58 of the Indian Partnership Act and section 13 corresponding to section 59 of the Indian Partnership Act run as follows : 8. Manner and particulars of registration.-The registration of a limited partnership shall be effected by sending by post or delivering to the Registrar at the Register Office . . . a statement signed by the partners containing the following particulars. . . . 13. Registrar to file statement and issue certificate of registration.-On receiving any statement made in pursuance of this Act the Registrar shall cause the same to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner in the firm. The learned judge held that it is necessary therefore not only that the firm should be registered, but the person suing must be shown as a partner in the firm and it is admitted that on the date when the plaint was filed the second part of this condition had not been carried out . The learned judge did not accept the contention made on behalf of the plaintiff. He held that registration amounts to more than what is said in section 58 as the Registrar must be satisfied that the provisions of section 58 had been duly complied with and must record an entry in the register of firms. The question as to whether, when all the provisions were complied with and the statement contained no material defects, the act of the Registrar under section 59 amounted to a mere clerical act of recording or discretionary act was not raised, considered or decided in that case. The learned judge did not refer to the corresponding English law or the commentary of Lindley which we have extracted earlier in this judgment. The question of the requirement of section 69 of the Indian Partnership Act that the person suing should be shown in the register of firms as a partner in the firm doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tituted. Though the learned judges did not specifically disapprove the view of Lindley, they expressed a view which differed from the view of Lindley and amounted to an implied disagreement with the view of Lindley. The learned judges also agreed with the view of Kendall J. in Firm Ram Prasad v. Firm Kamta Prasad AIR 1935 All. 898, that the requirement of section 69(2), i.e., persons suing are or have been shown in the register of firms as partners in the firm, was not fulfilled. In view of what we have already discussed and stated in this judgment, we respectfully disagree with the view of the learned judges in Firm Ram Prasad's case (supra) and Bank of Koothatukulam v. Thomas AIR 1955 TC 155, and respectfully agree with the view of Lindley in the passage already extracted by us and hold that registration became effective on October 20, 1955, the date on which the statement was delivered to the Registrar. We accept the first contention on behalf of the assessee. Contention No. 2 :-At the time when the assessee presented the application under section 26A, i.e., October 14, 1955, the partnership was an unregistered one not having been registered under the Partnership A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If the Income-tax Officer had passed an order promptly on the application before October 26, 1955, treating it as barred by limitation under rule 2(a) on the ground that the partnership was unregistered at the time of presentation of the application, it would still have been open to the assessee to present another identical application before October 26, 1955, and claim benefit as filing an application within time. It so happened that the order was passed by the Income-tax Officer on this application long after October 26, 1955, i.e., on March 23, 1961. By that time, the period available for the assessee up to October 26, 1955, to file another application claiming benefit as registered partnership had expired. But his application dated October 14, 1955, was pending with the Income-tax Officer even after the partnership became registered on October 20, 1955. At the time when the Income-tax Officer passed an order on the application, he was dealing with a partnership which was a registered partnership though on the date on which the application was filed before him (October 14, 1955), it had been an unregistered partnership. This change in the nature of the partnership, which had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6A that the firm was registered under the Partnership Act. In Commissioner of Income-tax v. Filmistan Ltd. [1961] 42 ITR 163 (SC) the relevant facts were as follows. The assessee was allowed to pay the amount of income-tax in instalments. He defaulted payment of the last instalment of ₹ 3,000 which was payable on or before March 20, 1955. On account of this default, the Income-tax Officer passed an order dated March 31, 1955, under section 46(1) of the Act imposing a penalty of ₹ 3,000. On April 20, 1955, the assessee filed an appeal to the Appellate Assistant Commissioner. Subsequently, on May 16, 1955, he paid the last instalment of ₹ 3,000, that is, the defaulted instalment, which was payable on or before March 20, 1955. The Income-tax Officer raised a preliminary objection. This was based on the proviso to section 30(1), which runs as follows : Provided that no appeal shall lie against an order under sub-section (1) of section 46 unless the tax has been paid. A contention was raised before their Lordships of the Supreme Court and they dealt with it as follows : The controversy between the parties revolves round the words 'no appeal shall lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. In section 30(1), the requirement is unless the tax has been paid . In this case, the provision in rule 2(b) is where the firm is registered under the Indian Partnership Act, 1932. Their Lordships clearly indicated that, under the provisions of section 30(1), if the application had been filed, i.e., presented first, and if the tax had been paid later, it will be held to be properly filed only on the day on which the tax has been paid. In the same way, in this particular case the application under section 26A of the Income-tax Act will be deemed to be properly made only on the date on which the partnership was registered under the Partnership Act, i.e., on October 20, 1955. Section 30(2) of the Income-tax Act says that the appeal shall ordinarily be presented within thirty days of the payment of the tax . . . but the Appellate Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period. In this case, the application has to be taken as properly made, i.e., filed as an application by a firm registered under the Partnership Act on October 20, 1955, which was wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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