COMMISSIONER OF INCOME TAX Vs. JOSEPH AND GEORGE

JUDGEMENT

(1.) A short yet important question has been referred to us by the Income-tax Appellate Tribunal at the instance of the revenue. We may at the outset state a few facts even before we extract the question.

(2.) THE assessee is a firm of lawyers, Joseph & George, and the partners have been carrying on their profession as an unregistered firm. On 10th April, 1964, they drew up a document of partnership embodying the terms and constitution of the firm, and, on the same day, they applied for registration of the firm for the assessment year 1964-65, the accounting year being from 1st April, 1963, to 31st March, 1964. Since the application for registration was not filed before the close of the previous year, an application for condoning delay was filed, the reason for the delay being that the senior partner of the firm was ill. THE Income-tax Officer was satisfied about the reason ; and he consequently excused the delay. But he did not register the firm, as, in his opinion, the document of partnership was not in force during the relevant accounting year. THE assessee-firm took up the matter in appeal before the Appellate Assistant Commissioner, and he took a different view on the question. He held that, since the Income-tax Officer excused the delay in filing the application for registration, he should have registered the firm as well. In the opinion of the Appellate Assistant Commissioner, under the Income-tax Act of 1961, the document of partnership need not have been in force during the relevant accounting year and it was enough if the document accompanied the application for registration. This view of the Appellate Assistant Commissioner was confirmed by the Income-tax Appellate Tribunal; and the question referred at the instance of the revenue is:

(3.) THE argument of the counsel for the assessee may now be scrutinised. THE counsel argues that the change in the language of the section [Section 184(1)(i)] is clear that the legislature wanted to change the effect of the decision of the Supreme Court in Mitter's case; that is why the language used in the new section is " partnership is evidenced by an instrument". THE question for us to consider is whether this was the intention of the legislature in using a new language in the new section. THE conclusion of the Supreme Court with which we are concerned in this connection is not so much the meaning of the expression "partnership constituted under a document"; the relevant question is whether the instrument of partnership should be operative during the previous year. THE Supreme Court observed in Mitter's case :