9911796707
TMI Blog1984 (6) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the shares or the firms in the assessee's income. The ITO, therefore, initiated rectification proceedings under section 154 read with section 254 of the Income-tax Act, 1961 ('the Act') to which the assessee's representative objected to as under : " The above mentioned firms were assessed as an unregistered firms and the assessee's shares of income were correctly included on that basis. It, therefore, cannot be stated that there is a mistake in the assessment capable of rectification under section 154 or the Act. It is only for this reason that a special provision, i.e., section 155(1), has been made to cover a situation like the present one. After quoting section 155(1), the authorised representatives have contended that the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1978 and 13-1-1978, he revised the computation of the assessee's income. The said order of the ITO was upheld by the Commissioner (Appeals) on an appeal filed by the assessee. The assessee has, consequently, come up in second appeal before us. 2. We have heard the representatives of the parties at length in this appeal. The assessee's contention raised before us was that the inclusion of its share of income from the two firms on the basis that they were unregistered could not be said to be a mistake apparent from the records having regard to the fact that the grant of registration to these firms was still under challenge by the department. Therefore, the matter being sub judice, the ITO was not competent to assume jurisdiction under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, amount to a change in the taxable income of the partners. In fact, it amounts to a change in the method of computation of tax of the firm because section 67 prescribes method of computing the partners' shares in the income of a registered firm. But the share which has already been subjected to tax in the hands of the firm as if it were an unregistered one would be liable to be excluded except for rate purpose. The contention of the assessee that the final order in the case of the firm is yet to be passed is also without substance because a final order does not necessarily mean the final order of the highest Court. The firms in which the assessee is a partner have already been granted registration by the orders of the AAC and those ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was granted to the two firms. If the ITO is debarred from recomputing the assessee's share under section 155(1), we do not understand as to how the correction will be permissible in law. Each order passed under section 154, 250, 254, 260, 262, 263 or 264 has to be considered as a final order till a fresh order varying the same is passed by the higher authority. 4. Accordingly, we are of the opinion that there is no force in this appeal which is, accordingly, dismissed. Per Shri Anand Prakash, Accountant Member --I entirely agree with my learned brother's reasoning and conclusions. In addition I may observe as follows : " The word 'assessment' in the context of section 143/144 includes all the various steps by which (1) the total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artner by the firm, which had been excluded as above is added. The resultant figure is the share of a partner in the registered firm. In the case of an unregistered firm, however, the tax paid by the firm is not deducted from the total income of the firm before allocation of the income amongst the partners in accordance with section 67. The above difference may be illustrated by an example. Let me suppose that the income of a firm is Rs. 1,00,000, salaries, etc., paid to partners aggregate to Rs. 20,000 and the tax payable by it as registered firm is Rs. 10,000. Then, for the purpose of distributing the income of the firm amongst the partners, the income or the registered firm will be Rs. 1,00,000 - (Rs. 20,000 + Rs. 10,000), ie., Rs. 70,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des in its ambit the appellate stages also. An order giving effect to an appellate order will also be an assessment of the firm for the purpose of section 143--Chloride India Ltd. v. CIT [1977] 106 ITR 38 (Cal.). The revision of assessment of the firm by the ITO to give effect to the appellate order will, therefore, be an 'assessment' of the firm and if variation is involved in the tax burden of the firm and the share incomes of the partners, it will be a case which will fall squarely within the language of section 155(1), which stipulates that-- " Where in respect of any completed assessment of a partner in a firm it is found-- (a) on the assessment or reassessment of the firm, or ... the share of the partner in the income of the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
