COMMISSIONER OF INCOME-TAX Vs. STANDARD PLASTIC INDUSTRIES

JUDGEMENT

(1.) THE assessee is a firm which was originally constituted under a deed of partnership dated September 17, 1962. Under the terms of the deed, the partnership was for a period of three years. The three years expired on August 31, 1965. The partnership, however, continued though no fresh deed was written. The partners and the shares of the partners continued as before. For the accounting year 1962-63, registration was granted to the firm on the basis of the deed of partnership dated September 17, 1962. Registration was continued for the accounting years 1963-64, 1964-65, 1965-66 and 1966-67. Declaration for continuation of registration for the accounting years 1967-68 and 1968-69 were also filed and continuation of registration was granted by the Income-tax Officer. The continuation of registration for the accounting years 1967-68 and 1968-69 was, however, cancelled by the Additional Commissioner of Income-tax on the ground that there was no deed of partnership in existence during the relevant accounting years. On appeal by the assessee, the Tribunal set aside the order of the Additional Commissioner of Income-tax on the ground that a deed of partnership was essential for initial registration but not for continuation of registration. At the instance of the revenue, the following question has been referred to us for our decision:

(2.) SECTION 184 of the Income-tax Act, 1961, to the extent that is necessary, may be usefully extracted here. It is as follows :

(3.) A striking difference between the procedure under the 1922 Act and 1961 Act is at once noticeable. Whereas under the 1922 Act, an application for registration had to be made to the Income-tax Officer every year, under the 1961 Act, an application has to be submitted at the time of the initial registration only, but not for subsequent years. During subsequent years, all that is necessary is the furnishing of a declaration in the prescribed form, upon the furnishing of which, registration originally granted will continue for every subsequent assessment year. Section 26a of the 1922 Act required the existence of an instrument of partnership specifying the individual shares of the partnership for the purposes of registration under that Act. Similarly, Section 184 (1) and (5) prescribe the existence of an instrument of partnership for the purposes of the original registration of a firm. But, for continuation of registration under Section 184 (7), the existence of a deed of partnership is no longer necessary. All that is necessary is that the firm continues as before whether there is a deed of partnership currently in force or not. The language of Sub-section (7) is mandatory that registration once granted shall have effect for every subsequent year provided the relevant declaration is made. It does not stipulate the current subsistence of a deed of partnership.