Law:

Section:

Section 184 of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment year 1963-64 - Whether if out of several activities of a firm one activity turns out to be illegal, that would not render constitution of firm illegal and on that ground it could not be refused registration or renewal of registration under Act - Held, yes FACTS The assessee-firm carrying on business of tyre-retreading, and registered for assessment year 1962-63, sought the benefit of registration for the assessment year 1963-64. The ITO having found that it had started the business of plying two buses without owning them or having permits for plying them, declined to extend the benefit or registration on the ground that it was carrying on an unlawful business. On second appeal, the Tribunal upheld, the Income-tax Officer's order. On reference: HELD In the case of Oudh Cocogem & Provisions Stores v. CIT [1968] 69 ITR 819 (All) it was held that if out of several activities of a partnership firm one of the activities turned out to be illegal that did not render the constitution of the firm illegal and on that ground the income-tax authorities were not justified in refusing registration or renewal. In the instant case, even if plying of buses by the assessee was illegal there remained the fact that from its inception the assessee was carrying on the business of retreading tyres, the legality of which had not been assailed. The assessee was, therefore, entitled to the benefit of registration. Hence, it was not necessary to consider the further submission of the assessee that the ITO was wrong in holding that the business of plying of buses by the assessee was illegal. Note: The case was decided in favour of the assessee. CASES REFERRED TO : Jer & Co. v. Commissioner of Income-tax [1966] 60 ITR 336 (All.) and Oudh Cocogem & Provisions Stores v. Commissioner of Income-tax [1968] 69 ITR 819 (All.). JUDGMENT Pathak, J.-At the instance of the assessee the Income-tax Appellate Tribunal, Delhi Bench, has referred the following question of law for the opinion of this court. "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that…

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