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TMI Blog1923 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court on any such question. 3. There remain two points set forth in the order of reference. One of these is of no great practical consequence and may be disposed of at once. The objectors were being assessed to Income Tax for the financial year 1922-23 on the basis of the profits disclosed by their accounts for the calendar year 1921. In those accounts a total sum of ₹ 42,882 was shown as interest paid on account of money advanced during the year by partners in the firm for the purpose of carrying on the business. The objectors claim that this interest should be reated as an allowance admissible under Section 10(2)(iii) of the Indian Income Tax Act, and should, therefore, be deducted from the net profits of the year before these are assessed to Income Tax. The Assistant Commissioner, who examined the books of the firm, reports that the money in respect of which this interest is charged in the account was not really ''capital borrowed for the purposes of the business, but represented only an advance of capital by the partners. This is so nearly a pure question of fact that it is not easy to formulate any question of law arising thereon in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not denied that certain rules have been made by competent authority, and duly published, so as to have effect as if enacted in this Act [vide Section 59(4) of the same] which ''prescribe'' the manner in which a firm entitled to do so can get itself registered. Those rules have been laid before us. In Rule 2 it is laid down that the application to the Income Tax Officer must be made on or before the date on which a return is due under Sub-section (2) of Section 22 of the Indian Income Tax Act. In Rule 3 it is laid down that the application must be in a prescribed form and be accompanied by the original instrument of partnership under which the firm is constituted, together with a copy thereof. The Income Tax Officer is empowered in special cases to dispense with the production of the original instrument, but a properly authenticated copy must always be produced. 10. Now, in the present instance, it is not denied that the very latest date on which a return was due from the objectors under Sub-section (2) of Section 22 of the Indian Income Tax Act was the 5th of July, 1922. On this date there was not even in existence an instrument of partnership specifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the objectors a registered firm for the purposes of assessment during the financial year 1922-23, if they were not such within the meaning of the definition. Indeed, the exigencies of Dr. Sen's argument brought him perilously near the position that a formal certificate of registration, dishonestly or corruptly issued by an Income Tax Officer in flat defiance of the rules, would bind the Income Tax authorities and carry with it a right of exemption from super-tax. In the present instance, of course, there is no suggestion of intentional misconduct on the part of the Income Tax Officer. Indeed it is obvious that he did not himself regard the certificate granted by him as of any effect prior to the 30th of January, 1923. No could it have any such effect, supposing it to be otherwise valid; for in Rule 5 of the rules on the subject it is expressly laid down that such a certificate of registration shall have effect from the date of registration. Obviously this certificate was never intended to affect the liability of the objectors to payment of super-tax which was being levied in respect of the earnings of their firm during the calendar year 1921. That liability could not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general order would have transferred to the Assistant Commissioner from the Income Tax Officer the duty of dealing with any application for registration which the firm might make. We do not know whether this was the case or not; the point is one which the Commissioner might do well to note, so that no such complication may again arise as was permitted in this case. It appears that, while, the question of their assessment was before the Assistant Commissioner, the objectors went, behind his back, to the Income Tax Officer with an application for registration, first presented on the 2nd of January, 1923, and again on the 5th of January, 1923, after the instrument of partnership had been returned for certain amendments. It was on this application that the Income Tax Officer's certificate of registration was obtained on the 30th of January, 1923. The Assistant Commissioner was in complete ignorance of these proceedings when he made his assessment on the 26th of January, 1923. On that date the objectors were beyond all question an unregistered firm and were very properly assessed as such. 22. From this statement of the facts it is clear that the objectors were to blame for not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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