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TMI Blog1979 (1) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Kumar admitted to the benefit of partnership. 6. Mohinder Kumar . 7. Raj Kumar . 8. Anil Kumar . 9. Rajinder Kumar adopted son of Jagan Nath . 10. Sanjiv Kumar, minor son of late Kishan Chand . The firm was accepted as a genuine set up and is stated to have been granted registration for the asst. yrs. 1972-73 and 1973-74. 3. Mangat Rai, partner, died on 15th April, 1973. A new deed of partnership was executed on 18th April, 1973 and the only change, vis-a-vis the partnership agreement dt. 20th April, 1971 was the exclusion of Mangat Rai who expired, as mentioned above. In the preamble of the partnership deed dt. 18th April, 1973, we like to note the following para: "Whereas the accounts of the firm were closed on 31st March, 1973, and a period thereafter was just of 15 days as such the continuing partners have agreed that this deed of partnership shall be deemed to be valid w.e.f. 1st April, 1973" A copy of the deed is given to us and is at pages 4 to 6 of the assessee's paper book. The ITO refused registration to the assessee on the following two grounds:- "1. Manga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h April, 1973 shown at Rs. nil remain uncontroverted which fact is supported also by an affidavit by Smt. Sheela Devi. I am also inclined to agree with the learned counsel on behalf of the appellant that it is on account of unconscious mistake on the part of the draftsman that agreement was made effective from 1st April, 1973. On account of this technical mistake, I am of the opinion that grant of the registration to the firm should not have been refused. In this connection, the learned counsel for the appellant also relied upon the judgment of the Supreme Court in Ram Laxman Sugar Mills vs. CIT and another, (1967) 66 ITR 613. In particular, he has referred to the observations of the Supreme Court that:- "In ascertaining the legal effect of a transaction the Court seeks in the first instance to determine the intention of the parties, and when ambiguous expressions are used, the Court may normally adopt that interpretation which upholds the deed if the parties thereto have acted on the assumption of its validity. "It has been urged that in the instant case, the intentions of the party are clear that the partnership was effective from 16th April, 1973 though inadvertently menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erally closed on 31st of March, every year". Reverting back to the reasons of the ITO for refusing registration, which we have recorded above, the first is that profits for the period 1st April, 1973 to 15th April, 1975 were not divided in accordance with the partnership deed dt. 20th April, 1971 but as per deed dt. 18th April, 1973. In this connection, we like to refer to the Supreme Court judgment in the case of CIT vs. Ashok Bhai Chiman Bhai.(3) The Hon'ble Supreme Court has laid down a very important principle that "profits do not accrue from day today or even from month to month and have to be ascertained by a comparison of assets at two stated points. In the case of partnership, where the accounts are to be made at stated intervals, the right of a partner to demand his share of the profits does not arise until the contingency which by operation of law or under a covenant of the partnership deed gives rise to that right, has arisen". If we keep the said principle in view, the profits accrued in the assessee's case only on 31st March, 1974, and therefore, registration could not be refused on the ITO's first reason, for there were no profits or losses which could be said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down that when there is a special provision under a taxing statute one should not travel to the general law. Now under s. 187(b) of the Act there can be only one assessment even if under the general law there can be said to be a dissolution. If such is the case, then the Revenue's agitation in the present case seems fruitless. 10. Once it can be said that two assessments cannot be framed in the case of a reconstitution because of the provisions of s. 187(2) of the Act, it follows that a firm cannot be granted registration for a part of the year. Therefore, there could be no question of any declaration under s. 184(7) of the Act for the period 1st April, 1973 to 15th April, 1973. 11. The profits were distributed in accordance with the shares of the partnership as specified in the deed dt. 18th April, 1973 which was operative during the accounting period and which in terms provided that accounts will date back from 1st April, 1973. In fact, even the assessing officer, i.e. the ITO has allocated the profits in his order under s. 143(3) in accordance with the shares specified in the deed dt. 18th April, 1973 for the whole year i.e from 1st April, 1973 to 31st March, 1974. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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