CHINTALAPATI RANGA NAIKULU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question of law is referred under section 66(1) of the Indian Income-tax Act for the opinion of this court, namely :

(2.) THIS reference relates to the assessment year 1956-57. The assessee is a firm of two partners each having an equal share, constituted under an instrument of partnership dated November 15, 1955. It applied for registration of the firm under section 26A of the Income-tax Act for the said assessment year but the department refused to grant registration on the following two grounds :

(3.) THE point that falls for determination is whether carrying forward a part of profit without distributing them in the year of assessment would incur the consequence of rejection of registration. Section 26A, which deals with registration of firms, runs as follows :