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Issues: (i) Whether refusal of registration of the firm under section 27 of the Kerala Agricultural Income-tax Act, 1950, was justified for want of accounts and for alleged non-conformity between the profit-sharing ratio stated in the application and the partnership deed; (ii) Whether the Deputy Commissioner could exercise suo motu revisional power under section 34 of the Kerala Agricultural Income-tax Act, 1950, to set aside the grant of registration.
Issue (i): Whether refusal of registration of the firm under section 27 of the Kerala Agricultural Income-tax Act, 1950, was justified for want of accounts and for alleged non-conformity between the profit-sharing ratio stated in the application and the partnership deed.
Analysis: Section 27 requires an application by a firm constituted under an instrument of partnership specifying the individual shares of the partners. Neither the section nor the rules warrant importing an additional requirement that the firm must have kept accounts. The application could not be rejected merely because the profit percentages in the application were arithmetically worked out from the capital contribution clause and did not reproduce the ratio in the exact figures suggested by the revisional authority. The partnership deed did not itself expressly state a separate profit-sharing ratio, and the rules and prescribed form did not justify rejection on that ground.
Conclusion: Refusal of registration on these grounds was not justified and the answer to this issue was in favour of the assessee.
Issue (ii): Whether the Deputy Commissioner could exercise suo motu revisional power under section 34 of the Kerala Agricultural Income-tax Act, 1950, to set aside the grant of registration.
Analysis: The revisional power under section 34 was available to the Deputy Commissioner, and on the facts the authority could interfere with the order of registration if the statutory requirements were not satisfied. The existence of revisional jurisdiction was not in doubt.
Conclusion: The Deputy Commissioner was competent to exercise suo motu revisional power, and the answer to this issue was against the assessee.
Final Conclusion: The first reference question was answered in favour of the assessee, while the second was answered in favour of the revenue. The reference was disposed of accordingly.
Ratio Decidendi: Registration of a firm under the relevant agricultural income-tax provisions cannot be refused on grounds not found in the statute or rules, and revisional power may be exercised only within the scope of the enabling provision.
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