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TMI Blog1998 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... that is to say, after the end of the previous year, under Form No. 12 that the firm continued to be registered for the first part of the previous year from Kartik Sud 1 to Bhadarwa Sud. 3, that is to say, from 24th Oct., 1976 to 16th Sept., 1977 disclosing that Manilal Lalji Mistry has died on 16th Sept., 1977. The partnership deed of the firm provided that the firm shall not be dissolved on the death of one of the partners. The AO pointed out that as it is not a case of dissolution of the firm, the declaration furnished by the firm in pursuance of sub-s. (7) of s. 184 is not in order. According to the AO, it was a case where there has been a change in the constitution of the firm resulting on account of death of the partner coupled with provision in the partnership deed. In order to avail the benefit of continued registration for the previous year in question, the assessee must have filed an application in Form Nos. 11 and 11A for registration afresh in terms of s. 184(8) and as the assessee has not done so, he made order that the registration granted to the firm shall not have the effect for the relevant assessment year. This order of the AO was affirmed by the AAC vide his order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 184 for registration of the firm for the purposes of the Act is to be made to the ITO on behalf of the firm which could be made either during the existence of the firm or after its dissolution subject to other provisions of s. 184. Apart from other requirements as to signature, etc., it also requires the application to be made in the prescribed form which is to contain prescribed particulars. Sub-s. (7) of s. 184 envisages that where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year provided that : (i) there is no change in the constitution of the firm or in the shares of the partners as evidenced in the instrument of partnership on the basis of which registration was granted, and (ii) the firm furnishes, before the expiry of the time allowed under sub-s. (1) or sub-s. (2) of s. 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. Sub-s. (8) of s. 184 envisages that where any such change in the constitution of the firm or in the shares of the partners has ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be recorded on the last of the instruments evidencing the partnership during the relevant previous year (or on the certified copy submitted in lieu thereof) attached with the application for registration of the firm. 7. Sec. 185(4) of the Act requires the ITO where a firm is registered for any assessment year, to record a certificate on the instrument of partnership that the firm has been registered under this Act for that assessment year. Where it is a case for declaration under Form No. 12 for the registration to have continued effect for the subsequent assessment year, the ITO is to record such certificate for the relevant subsequent assessment year. Sec. 185(3) envisages that before a certificate for continued effect of registration for subsequent year is endorsed, the ITO while considering the declaration furnished by a firm in pursuance of sub-s. (7) of s. 184, finds it to be defective in any manner, he is required to give a notice to intimate defect to the firm and give opportunity to rectify the defects. On failure to rectify the defects, he is to order in writing and declare that the registration granted to the firm shall not have effect for the relevant assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanges that have taken place during the previous year concerned. 10. Form No. 12 which prescribes the form of declaration under s.184(7) when there is no change in the constitution of the firm during the previous year and for continuation of the registration for the previous year in question, the relevant declaration with which we are concerned reads as under : "(ii) there has been no change in the constitution of the firm or the shares of the partners since the last day of the previous year relevant to the asst. yr. 19. . 19... upto the last date of the previous year relevant to the asst. yr. 19. 19. . . or to the date ( ........ 19 .... ) of dissolution of the firm. 11. It may not be out of place to notice here the distinction in treatment for the purposes of income-tax between (i) a firm which is not dissolved but reconstituted or (ii) a firm which is dissolved and (iii) a firm where there is change resulting in succession by any other firm, Sec. 187 envisages that where there is change in the constitution of the firm at the time of making assessment under s. 143 or s. 144, the assessment has to be made on the firm as constituted at the time of making the assessment provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the business continued or the firm stood dissolved. Sec. 184(7) envisages that registration granted to any firm is to continue for every subsequent assessment year. The provision is not to envisage continuance of registration until there is change in the constitution of the firm. The distinction between continuance of the registration upto the date of dissolution in the case of dissolution of the firm and for whole of the previous year in question becomes relevant in view of the scheme that where there is change in the constitution of a firm as distinct from dissolution of the firm under s. 187, the assessment of such entity continues to be the same and exists during the whole of the previous year and only one assessment is contemplated for the whole of the period covered under the assessment year. There is no truncated assessment for the period upto the reconstitution of the firm or after the reconstitution of the firm. The only difference which it makes about the assessment of the firm is in the apportionment of profits or loss amongst partners during the year as per changes for the purpose of assessment of partners and about the continued responsibility of firm to make pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic continuance of registration within the meaning of s. 184(7). As soon as change occurs in the constitution of the firm, the provision under s. 184(8) springs into operation requiring a fresh application of registration in Form No. 11A r/w r. 22 of the IT Rules. Therefore, in our opinion, the Tribunal was not correct when it said that at the time of considering the application for continued registration, it is not relevant to consider whether the change that has occurred during the previous year amounts to change in the constitution of the firm or amounts to dissolution of the firm. The Tribunal also erred in not appreciating the distinction which was brought to its notice that exists between a case of dissolution with which the Madras High Court was concerned in the case of Abdul Kareem & Co. and the case of change of constitution with which we are concerned. 13. It is not in dispute that the firm continued to maintain one account, it filed one return for the whole of the previous year and did not put forward any claim of the dissolution of the firm, Without laying any claim for the dissolution of the firm, in our opinion, there could not have been any application for continued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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