KERALA PUBLICITY BUREAU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) INCOME-tax Reference No. 49 of 1982 and I.T.Rs. Nos. 10 and 11 of 1987, are coming up for consideration of the Full Bench in view of separate orders of reference by two Benches of this court. The issue involved in the above cases relates to the question of registration of firms under the Kerala Agricultural INCOME-tax Act, 1950, and the INCOME-tax Act, 1961. The provisions regarding registration of firms under the above-mentioned statutes and the rules issued thereunder are substantially similar. While I.T.R. No. 49 of 1982 relates to a reference under Section 60(2) of the Kerala Agricultural INCOME-tax Act, 1950, I.T.R. Nos. 10 and 11 of 1987 relate to a reference under Section 256(1) of the INCOME-tax Act, 1961.

(2.) THE detailed reference order is in I.T.R. No. 49 of 1982. THE learned judges of the Bench doubted whether an earlier Bench decision of this court in CIT v. Ithappiri and George [1973] 88 ITR 332 and the decisions following the same, taking the view that the individual shares of partners in losses also should be specified in the partnership deed, to enable registration under Section 184 of the Income-tax Act, would apply even in cases where minors are not admitted to the benefits of partnership and there are indications to show that the partners are to share equally. It was also felt that the matter requires reconsideration in the light of later decisions of the Supreme Court in Mandyala Govindu and Co. v. CIT [1976] 102 ITR Land the Full Bench decision of the Andhra Pradesh High Court in CIT v. Krishna Mining Co. [1980] 122 ITR 362. We make it clear-that we are not concerned in this case as to what will happen if, in a particular case, minors are admitted to the benefits of partnership and the individual losses of the partners are not specified in the partnership deed. We leave that aspect open.

(3.) REJECTING the objections raised by the assessee, the Commissioner of Agricultural Income-tax held in his order dated August 6, 1981, that the order passed in the revision petitions for the years 1961-62, 1962-63 and 1963-64 was not binding for the other assessment years, that there was no mention regarding the capital allotted to each partner though there is a stipulation that the net profit should be divided among the partners and that as specification of shares in the partnership deed is a condition precedent to granting registration and for allowing the application for renewal of registration, the registration and renewal granted to the assessee were wrong. It was further held that the facts of the pases relied on by the assessee were entirely different and, therefore, those decisions were of no help to the assessee, that in order to ascertain the shares of the partners, it was not open to refer to extraneous evidence, that the provisions in Section 13 of the Partnership Act would apply only to profit and loss, and not to capital and, therefore, the defect of failure to refer to the share capital in the deed cannot be rectified. By taking recourse to the decisions of the Supreme Court in R.C. Mitter and Sons v. CIT [1959] 36 ITR 194 ; AIR 1959 SC 868 and N.T. Patel and Co. v. CIT [1961] 42 ITR 224 ; AIR 1961 SC 1356, it was held that non-specification of the shares of the partners in the firm disqualified it for registration under section 27 of the Agricultural Income-tax Act. The renewal of registration granted for the year 1975-76 was withdrawn and the assessing authority was directed to modify the assessment order assigning to the assessee the status of an unregistered firm. Similar view was taken by the Deputy Commissioner of Agricultural Income-tax and Sales Tax for the assessment years 1969-70 to 1974-75 under proceedings dated July 20, 1981, which is the subject-matter of I.T.R. No. 4 of 1986.