COMMISSIONER OF INCOME TAX Vs. KHANNA THEATRE

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Jabalpur Bench, Jabalpur, has referred the following question of law to this court for its opinion :

(2.) THE material facts giving rise to this reference, briefly, are as follows ; For the assessment years 1978-79 and 1979-80, the assessee-firm had filed returns declaring loss. For the assessment year 1978-79, the assessee had also filed an application for registration while, for the assessment year 1979-80, the assessee had filed an application for continuation of registration. While framing the assessment, the Income-tax Officer held that as the assessee had not distributed the loss among the partners, the assessee was not entitled to registration. THE Income-tax Officer, therefore, rejected the application for registration and assessed the assessee as an unregistered firm. On appeal, the order passed by the Income-tax Officer was upheld. THE assessee, thereupon, preferred second appeal before the Tribunal. THE Tribunal held that the assessee-firm was entitled to registration. THE Tribunal, therefore, allowed the appeal. Aggrieved by the order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.

(3.) IN view of the aforesaid provision, the Tribunal was right in holding that failure to distribute the loss suffered by the assessee among the parties would not disentitle the assessee-firm to registration.