SHANKER TOBACCO STORES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference was heard by us on the 4th February, 1969, None appeared for the applicant on that occasion. After hearing the counsel for the revenue we delivered judgment on that day. Thereafter, the matter was mentioned before us by the learned counsel appearing for the assessee and it was prayed that as through inadvertence the counsel could not appear on that date he should be given an opportunity to make his submissions. We gave him such opportunity and this judgment is being delivered in supersession of the judgment we delivered on the 4th February, 1969.

(2.) This was a reference under Section 66(2) of the Indian Income-tax Act for the determination of the following question:

(3.) The application for registration of the firm under Section 26A of the Indian Income-tax Act was refused by the Income-tax Officer. On appeal, the Appellate Assistant Commissioner held that the assessee-firm was not entitled to registration. There was a further appeal before the Tribunal. The Tribunal after going through the facts of this case observed that there was a specific provision in the instant case that the partners would have to introduce capital in proportion to their profit sharing ratio, but the deed of partnership did not specify as to what would be the capital of the firm. The deed of partnership, on the basis of which registration was sought, the Tribunal was of the opinion, was vague. The Tribunal further held that the contribution by the partners in the form of capital could also not be determined with any degree of certainty. The Tribunal was of the opinion that it was not possible to determine what would be the amount introduced by the partners on which interest had to be charged and debited to the profit and loss account. Therefore, the Tribunal held that the profit as well as the distribution thereof among the partners was uncertain and vague. From those facts the Tribunal came to the conclusion that the firm was not entitled to registration under Section 26A of the Indian Income-tax Act, 1922.