BALAKRISHNAN NAIR Vs. CAIT

JUDGEMENT

(1.) T.R. No.49/82 and I.T.R.Nos. 10 & 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 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. 49/82 relates to a reference under S.60(2) of the Agricultural Income Tax Act, 1950, I.T.R.Nos. 10 & 11 of 1987 relate to a reference under S.256(1) of the Income Tax Act, 1961.

(2.) Detailed reference order is in I.T.R. 49/82. The learned Judges of the Bench doubted whether an earlier Bench decision of this Court in Commissioner of Income Tax, Kerala v. Ithappiri & George, 1972 KLT 137 : (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 S.184 of the Income Tax Act, would apply even in cases where minors arc 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 & Co. v. Commissioner of Income Tax, A.P., (1976) 102 ITR 1, and the Full Bench decision of the Andhra Pradesh High Court in Commissioner of Income Tax, A.P. 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.) I.T.R. 49/1982 is at the instance of an assessee under the Agricultural Income Tax Act, 1950, which is a firm constituted by an instrument of partnership dated 6-1-1959. Registration was granted to the firm under S.27 of the Agricultural Income Tax Act read with R.2 of Agricultural Income Tax Rules, 1951 and it was being assessed as a registered firm. For the assessment years 1961-62, 1962-63 and 1963-64, even though the Commissioner of Agricultural Income Tax initiated proceedings to cancel the registration for the reason that there was no stipulation of individual shares of the partners in the partnership deed, it was finally dropped on being convinced, that there were materials available, to show that the partners had equal shares. Upto the year 1965-66 assessments were completed assigning the status of a registered firm. Renewal of registration had been granted even for the subsequent years upto 1975-76 and assessments completed on that basis. For the year 1965-66 proceedings were again initiated to cancel the renewal of registration already granted and by order dated 20-4-81, the Deputy Commissioner of Agricultural Income Tax took the view that the firm was not entitled to registration since individual shares of the partners were not specified in the deed. The above order is subject matter of I.T.R. 586/85.