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TMI Blog1977 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ration to the firm for the assessment year 1963-64 ?" From the question set out above, it could be seen that the real question is question No. 3, and the other questions merely set out certain facets of the issues that ultimately require consideration in granting the registration for the firm for the assessment year 1963-64. There was a partnership firm consisting of three partners by name M. Zahurul Huq, A. Sattar Khan and Mrs. Manzurunnissa Begum. Of the three persons named above, the last is the wife of the second. This firm of three partners came into existence in accordance with the terms set out in a deed dated February 28, 1958. The name of the firm was Messrs. A. Abdul Kareem and Company. The business of the firm was the manufacture and sale of beedies and allied products and the running of a printing press. The duration of the partnership was a fixed period of 10 years commencing from February 28, 1958. On the termination of the fixed term, the partners could continue the business of the firm on such conditions and terms as they might then mutually agree upon. The accounts of the firm were closed for the first time on the 31st March, 1958, and thereafter annually on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 968, and that notwithstanding the release, the partnership would have continued for the said fixed term as envisaged in the deed of partnership dated 28th February, 1958, and that in order to notify the change brought about by the release to the income-tax department and the banks, the execution of the deed was found necessary. Under the new document several of the clauses as specified in the old deed were to be part and parcel of the new deed. The new deed was to be effective on and from March 4, 1963, in so far as the changes brought about by the release was concerned. There are a few other clauses in the new deed to which reference is unnecessary for our present purpose. The books of the firm were closed on March 31, 1963; but the profits were apportioned on time basis and credited in favour of the three partners up to March 3, 1963, and in favour of the two partners from March 4, 1963, to March 31, 1963. A declaration in Form No. 12 prescribed by the I.T. Rules, 1962, duly signed by the three partners was filed for the purpose of continuance of the registration of the firm for the period April 1, 1962, to March 3, 1963. This declaration is dated March 30, 1964, and was actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to grant registration for the firm for the year under consideration. The delay that he condoned was obviously referable to the failure of the assessee to file the application for registration before the end of the previous year, viz., March 31, 1963, the relevant application having been filed only on April 1, 1964. The ITO who felt aggrieved by the said order of the AAC, filed an appeal before the Tribunal. The Tribunal came to the conclusion that the registration could not be granted to the firm on the basis of the instrument of partnership dated January 1, 1964, as the said partnership deed came to be executed after the expiry of the relevant year of account. The Tribunal, however, confirmed the order of the AAC taking the view that the partnership deed dated February 28, 1958, read along with the release deed dated March 4, 1963, evidenced the existence of the partnership by the two continuing partners with their respective shares and that there was compliance with s. 184(1) of the Act. To hold otherwise was, in the view of the Tribunal, technicality with a vengeance. It is this order of the Tribunal that has given rise to the present reference raising the questions set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application shall be accompanied by a duplicate copy of the original instrument. (6) The application shall be made in the prescribed form and shall contain the prescribed particulars. (7) 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 the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted; and (ii) 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 within 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the end of the relevant previous year, that is, on April 1, 1964. It would, therefore, follow that r. 22(4)(ii) would apply to the present case. As indicated already, in a case where a change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year or after the end of the previous year and before the date of the application, the application has to be in Form No. 11 A and it has to be accompanied by the instrument or instruments evidencing the partnership as in existence from time to time during the previous year and up to the date of the application together with copies thereof. In the present case, as pointed out earlier, Form No. 11 A has been filed and, in addition, application in Form No. 12 has also been filed. Rule 24 deals with declaration for continuance of registration, to be furnished under sub-s. (7) of s. 184, which, as prescribed under r. 24, is to be in Form No. 12. This declaration having been filed, the question is whether the assessee is eligible for the continuance of the registration as prayed in the application in Form No. 12 or whether the assessee is eligible for registration as prayed in Form No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-63, up to the last date of the previous year relevant to the assessment year 1963-64, or the date March 3, 1963, viz., the date of dissolution of the firm. The fact that the accounts were continued up to March 31, 1963, would not be relevant for this purpose. If the firm was dissolved on March 3, 1963, then the assessee could have filed an application only in Form No. 12 for continuance of registration up to the date of the dissolution as contemplated by the Form itself, the necessary declaration being that there was no change in the constitution up to that date. There is no dispute that there was no change in the constitution up to March 3, 1963. The ITO could not, therefore, have properly refused to grant the application in Form No. 12 in the present case. If the declaration in Form No. 12 is effective, then the continuance of the registration would be up to March 3, 1963. It may be that from March 4, 1963, up to March 31, 1963, the assessee would not be eligible for registration under that application, but the assessment with reference to only the said broken period could be made in the status of unregistered firm and not for the whole year in case the application in Form No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble consequence that there could be an assessment as an unregistered firm, subsequent to that date, consisting of the two partners is not relevant in the context of Form No. 12. The learned standing counsel did not contend that either the rules or the Forms are in any manner ultra vires and, therefore, we have to proceed on the basis that the rules and the Forms reflect correctly the legal position regarding the construction of the statutory provision in respect of which the Rules and the Forms have been prescribed. In this view, the grant of registration for the whole year by the Tribunal would be wrong and continuance of registration would have to be confined up to March 3, 1963. We may now consider the question as to whether the assessee is eligible for registration under Form No. 11 A prescribed under the Act. Paragraph 2 of the Form provides that the original or certified copy of the instrument evidencing the partnership in existence from time to time during the previous year up to the date of application together with a copy thereof is to be enclosed. In the present case, the application had been made after the end of the relevant previous year. Therefore, r. 22(4)(ii) woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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