COMMISSIONER OF AGRICULTURAL INCOME TAX Vs. ELEMBILERY ESTATE

JUDGEMENT

(1.) THESE are connected cases. The Commissioner of Agricultural Income-tax is the petitioner in both the original petitions. The common assessee is the respondent in both the cases. The Commissioner of Agricultural Income-tax, representing the Revenue in these two original petitions, filed under Section 60(3) of the Agricultural Income-tax Act, has prayed for a direction to the Agricultural Income-tax Appellate Tribunal, Kozhikode Bench, to refer the following questions of law, formulated in paragraph 7 of the original petitions, for the decision of this court. This was necessitated, since the Agricultural Income-tax Appellate Tribunal, by a common order dated April 3, 1984, for the years 1975-76 and 1976-77, declined to refer the questions of law for the decision of this court :

(2.) THE respondent/assessee was originally assessed as a registered firm. During the accounting period relevant to the assessment year 1975-76, there was a change in the constitution of the firm. One of the partners died. THE firm was reconstituted. In the place of the dead partner, his minor son was admitted to the benefits of the partnership. THE firm applied for registration. THE assessing authority found that the minor was not represented by the guardian in the instrument of partnership. He held that the partnership deed was not valid in law. He declined to grant registration to the firm. For the same reason, he refused renewal of registration for the assessment year 1976-77. In appeal, the Deputy Commissioner (Appeals), Kozhikode, found that the guardian of the minor who was admitted to the benefits of the partnership had, by a subsequent declaration, made it clear that the minor had been admitted to the benefits of the partnership with the consent and knowledge of the guardian. He held that the defect in the partnership deed stood cured and so the firm is entitled to registration. THE Revenue took up the matter in appeal before the Agricultural Income-tax Appellate Tribunal, Kozhikode. THE Appellate Tribunal upheld the decision of the Deputy Commissioner (Appeals). For the same reason, renewal was granted for the subsequent year. In declining registration to the firm, the assessing authority relied on the decision of the Allahabad High Court in Addl. CIT v. Uttam Kumar Promod Kumar [1974] 97 ITR 730. THE Appellate Tribunal distinguished the said decision and held that since the guardian had consented or agreed to the admission of the minor to the benefits of the partnership, the defect, if any, is cured and the firm is entitled to registration. According to the Appellate Tribunal, the fact that the assessing authority did not question the genuineness of the firm is a cogent factor. THE initial defect, if any, in the non-junction of the guardian stood cured by his subsequent consent. THE Appellate Tribunal referred to the decision of the Allahabad High Court in Brij Rattan Lal Bhoop Kishore v. CIT [1982] 136 ITR 722, and held that the firm should have been given an opportunity before refusing registration and, in that perspective, when such an opportunity was given, the guardian has assented to the admission of the minor to the benefits of the partnership and since the Deputy Commissioner was satisfied that the defect or infirmity has been rectified or cured, the Deputy Commissioner was justified in granting registration. It is from this common order for both the years--1975-76 and 1976-77 dated November 21, 1983--that the Revenue had filed application (R. A. Nos. 6 and 7 of 1984) for referring certain questions of law for the decision of this court, which was declined by the Appellate Tribunal by a common order dated April 3, 1984. It is in pursuance thereof that the above two original petitions are filed in this court.

(3.) THE original petitions are allowed.