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Issues: Whether the assessee-firm was registered under the Indian Partnership Act, 1932, before the end of the previous year so as to satisfy rule 2 of the Income-tax Rules, 1922 and qualify for registration under section 26A of the Indian Income-tax Act, 1922.
Analysis: Rule 2 required that where a firm was registered under the Indian Partnership Act, 1932, the application for registration had to be made before the end of the previous year. The statement filed under section 58 of the Partnership Act was returned by the Registrar as not duly stamped and incomplete, and no entry was made in the Register of Firms during the relevant previous year. Registration under section 59 arises only when the Registrar is satisfied that section 58 has been duly complied with and records the statement in the Register of Firms. Since the statement itself was not accepted and section 58 never came into operation during the relevant year, the firm could not be treated as registered. The Registrar's bona fide satisfaction and prescribed procedure were controlling on this aspect.
Conclusion: The firm was not registered under the Indian Partnership Act, 1932, during the previous year 1957-58, and the assessee was not entitled to registration under section 26A; the answer was against the assessee.
Ratio Decidendi: For the purpose of rule 2, a firm is registered under the Partnership Act only when the Registrar, being satisfied of compliance with section 58, records the statement in the Register of Firms under section 59; mere filing of an incomplete or returned statement does not amount to registration.
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