1966 (4) TMI 84 - HC - Income Tax

Court Holds Firm Registration Effective on Delivery of Statement

The court held that the registration of the firm under the Partnership Act was effective on October 20, 1955, upon delivery of the statement to the ... - Issues Involved:1. Whether the application under section 26A of the Income-tax Act was filed out of time.Issue-wise Detailed Analysis:Issue 1: Effective Date of Registration under the Partnership ActContention: The effective date of registration of the firm under the Partnership Act is October 20, 1955.Analysis:- Sections 58 and 59 of the Partnership Act: Section 58 specifies that registration is effected by delivering a statement to the Registrar, while Section 59 requires the Registrar to record an entry in the register of firms.- Arguments: The assessee argued that registration was effective upon the delivery of the statement on October 20, 1955. The department contended that registration was only effective when the Registrar made the entry on November 2, 1955.- Interpretation: The court concluded that the wording of Section 58 indicates that registration is effected upon delivery of the statement, while Section 59 involves a clerical act of recording the entry. The marginal titles of the sections, which suggest otherwise, do not override the clear wording of the sections.- Supporting References: The court referenced authoritative texts like Maxwell on The Interpretation of Statutes and Lindley on Partnership, which support the view that registration is effective upon delivery of the statement.- Case Law: The court disagreed with the judgments in Firm Ram Prasad v. Firm Kamta Prasad and Bank of Koothatukulam v. Thomas, which held that registration is effective only upon the Registrar's entry. Instead, the court agreed with Lindley's interpretation that registration is complete upon delivery of the statement.- Conclusion: The court held that registration became effective on October 20, 1955, when the statement was delivered to the Registrar.Issue 2: Application under Section 26A and Rule 2(b) of the Income-tax ActContention: The application to the Income-tax Officer is governed by rule 2(b) and was in time as the assessee presented it before October 26, 1955.Analysis:- Rule 2 of the Income-tax Act: Rule 2(a) applies to unregistered firms, requiring applications within six months of the firm's constitution. Rule 2(b) applies to registered firms, allowing applications before the end of the previous year.- Application Timing: The assessee's application on October 14, 1955, was initially governed by Rule 2(a) as the firm was unregistered. However, the firm became registered on October 20, 1955, before the end of the previous year on October 26, 1955.- Legal Interpretation: The court considered whether the period of limitation for the application extended automatically when the firm became registered while the application was pending.- Relevant Case Law: The court referenced Commissioner of Income-tax v. Filmistan Ltd., where the Supreme Court held that an appeal is deemed properly filed on the date a condition (payment of tax) is fulfilled, even if the appeal was initially filed earlier.- Conclusion: The court found that the application under section 26A, initially filed on October 14, 1955, should be deemed properly made on October 20, 1955, when the firm became registered. Thus, the application was within the time limit prescribed by Rule 2(b).Final Judgment:The court concluded that the application under section 26A of the Income-tax Act was filed in time and not out of time. No order as to costs was made.