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Issues: (i) Whether, in an appeal by a registered firm against its assessment, the claim that the partners were entitled to rebate under section 88 could be raised under sections 246 and 247 of the Income-tax Act, 1961. (ii) Whether the partners of a registered firm were eligible for relief under section 88 where the rebate had already been allowed to the firm.
Issue (i): Whether, in an appeal by a registered firm against its assessment, the claim that the partners were entitled to rebate under section 88 could be raised under sections 246 and 247 of the Income-tax Act, 1961.
Analysis: A registered firm is assessed first, and the income of the partners is thereafter brought into their individual assessments in accordance with the statutory scheme. Although the firm can appeal under section 246 against its assessment, section 247 governs the partner's challenge to the allocation of the firm's income as between partners. The question whether the partners can separately claim the rebate is not one that can be agitated in the firm's appeal, because the apportionment and individual entitlement of partners fall outside that proceeding.
Conclusion: The issue was answered against the assessee and in favour of the revenue.
Issue (ii): Whether the partners of a registered firm were eligible for relief under section 88 where the rebate had already been allowed to the firm.
Analysis: Section 67 and section 182 show that the income of a partner is computed and assessed through the statutory mechanism applicable to a registered firm. Rebate under section 88 was already granted to the firm in computing its total income, and the Act does not contemplate a second allowance of the same relief in favour of the partners. The statutory scheme prohibits double relief on the same allowance or rebate.
Conclusion: The partners were not entitled to any further relief under section 88, and the issue was decided against the assessee and in favour of the revenue.
Final Conclusion: The reference was answered wholly against the assessee. A rebate already allowed to a registered firm cannot be claimed again by its partners, and such partner-wise entitlement cannot be raised in the firm's appeal.
Ratio Decidendi: In the assessment of a registered firm, a rebate or allowance granted to the firm cannot be claimed again by the partners, and the partners' individual entitlement cannot be raised in the firm's appeal under the provisions governing firm assessments and appeals.
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