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Section 84 of the Income-tax Act, 1961 - Tax rebate - Allowability of - Assessment year 1964-65 - Whether 'rebate' admissible to partners of a firm cannot be regarded as income of firm and therefore, no question of apportioning or allocating same to partners constituting firm arises - Held, yes - Whether therefore, in proceedings for assessment of firm, question regarding admissibility of rebate under section 84 to individual partners could not be gone into - Held, yes FACTS The assessee, a registered firm, claimed relief under section 84 by reference to the capital employed by it as a new industrial undertaking. The ITO held that the assessee was entitled to a rebate, under section 84 and drew up the assessment order accordingly. He, however, went on to observe in the assessment order that no rebate on this account would be given in the hands of the partners. On appeal before the AAC, the assessee objected to the note made by the ITO directing that no rebate under section 84 would be admissible in the hands of individual partners. The AAC dismissed the appeal holding that the point relating to rebate admissible to partners of the assessee-firm did not and could not arise for consideration in the case of the firm. On second appeal, the Tribunal confirmed the order of AAC. On reference : HELD For purposes of the Act, a registered partnership firm and the partners constituting the same are distinct assessable entities different from each other. Accordingly, the question regarding admissibility of any rebate admissible to an individual partner, while computing his income, can be gone into only in his individual assessment and not during the firm's assessment. So far as the assessee-firm was concerned, its taxable income was to be worked out after making an allowance admissible to it under section 84. In this connection, any rebate or allowance deductible in the assessment of partners had no relevance. After the income has been so computed, the same, in the case of a registered firm, is to be allocated to the various partners. In computing the income of the firm, and allocating the same to its partners, the question regarding rebates admissible to individual…

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