RAO AND SONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66(1) of the Indian Income -tax Act, 1922, made by the Income -tax Appellate Tribunal, referring the following question of law to this Court: 'Whether on the facts and circumstances of the case, registration of the firm should have been renewed for the assessment year 1959 -60 under Section 26A of the Income Tax Act, 1922, read with Rules framed thereunder.'

(2.) THE assessee is a partnership concern constituted by a registered deed of partnership dated 28 -3 -1958. The principal object of the firm was to carry on money -lending business. The firm consisted of the following five members and according to the terms of the partnership, they had to share the profit and loss of the business in the manner, stated below:

(3.) ON appeal by the Firm, the Appellate Assistant Commissioner, income -tax, Cuttack, by his order dated 18 -6 -61, maintained the order of the Income -tax Officer and rejected the application for registration. He referred to various clauses of the partnership deed. According to him the terms of the deed presuppose maintenance of proper account' and as no accounts such as cash -book and personal account of the parties were maintained to show the necessary adjustment of profit and loss, he held the partnership did not exist in conformity with the conditions of the deed of partnership.