TaxTMI 
TaxTMI 
2003 (4) TMI 240
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....ssessee immediately filed a certified copy of the partnership deed duly signed by two partners and by relying on the various judgments reported in CIT vs. M.N. Ghosh & Sons (1987) 62 CTR (Pat) 219 : (1987) 167 ITR 125 (Pat), CIT vs. J.B. Coal Traders (1986) 51 CTR (Pat) 369 : (1987) 164 ITR 450 (Pat) and Ganga Motor Service vs. CIT 1975 CTR (Pat) 46 : (1977) 106 ITR 132 (Pat), the assessee contended that benefit of registration could not be denied to the assessee only for such technical default. However, the AO was not impressed with the submissions of the assessee. He was of the view that as per old provisions of s. 185(3) of the IT Act, the assessee could be allowed an opportunity to rectify the defect. But as per the amended provisions, w.e.f. asst. yr. 1993-94, the AO has not been given power to ask the assessee to rectify such defect. He further observed that the judgments cited by the assessee were applicable to the old provisions of the Act and not to the present provisions. Accordingly, the AO completed the assessment in the status of an AOP. 3. Being aggrieved, the assessee impugned the action of the AO in appeal before learned CIT(A). The submissions made before the AO....
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....ssee is aggrieved by the order of the CIT(A) and hence this appeal before us. 4. The learned counsel for the assessee reiterated the submissions made before the authorities below. He submitted that the assessee had filed a copy of the partnership deed duly certified by one of the two partners along with the return of income. The only defect was that such copy of instrument of partnership was not certified by both the partners. This defect was only of a technical nature. He submitted that immediately on receipt of the show-cause notice, the assessee rectified the defect and furnished a certified copy of the instrument of partnership signed by both the partners. Thus, he contended that the assessee could not have been treated as an AOP merely for such technical lapse. He relied on the following judgments: (i) CIT vs. Hyderabad Stone Depot & Ors. (1977) 109 ITR 686 (AP)(FB): Where the High Court has held that non-mentioning of minor's share in losses in column No. 6 of the application filed for registration was a curable defect and hence the assessee was entitled to registration. The High Court also observed that the intent of the law is not that the Revenue should gain a larger....
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....instrument of partnership. It consisted of two partners. As per provisions of sub-s. (2) of s. 184, the assessee was required to furnish a certified copy of the instrument of partnership along with the return. Explanation to s. 184(2) clarifies the meaning of certified copy, which means that all the partners of a firm must sign it. In this case, the assessee filed a photocopy of the partnership deed, which was signed by only one of the two partners. It is also a fact that in response to show-cause notice the assessee immediately rectified the defect and furnished a copy of the partnership deed duly signed by both the partners. Thus, the defect stood rectified before the assessment was completed. It is not the case of the Revenue that the firm was not genuine or it did not conform to the other requirements of the Partnership Act. Now, the question is whether, the assessee could be denied the benefit of registration merely for a technical lapse i.e., assessee's failure to furnish a copy of partnership deed duly signed by all the partners of the firm? The second issue that requires to be considered is whether, on subsequent filing of the instrument of partnership duly signed by both t....
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....tion of assessment amounts to compliance with the provisions of the Act and, therefore, the assessee is entitled to the benefit of registration. Accordingly, we set aside the order of the CIT(A) and direct the AO to treat the assessee-firm as a registered firm. 7. The next ground relates to sustaining of disallowance on account of interest paid to partners at Rs. 95,343. Briefly stated, the facts of the case are that the AO observed that as per provisions of s. 40(b)(iv) of the IT Act, payment of interest to partners can be allowed to partners only if it is authorised by the partnership deed and the same is not in excess of 18 per cent. In this case, the payment of interest was found to have been authorised by the partnership deed. But, according to the AO, specific terms had not been set out. Otherwise also, the assessment was completed in the status of AOP and, therefore, the AO disallowed the interest. On appeal, learned CIT(A) upheld the order of the AO on the ground that the order of the AO in treating the firm as an AOP was upheld. The learned CIT(A) did not adjudicate this ground on merits. The assessee is aggrieved by the order of the CIT(A) and has now brought the issue....