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Section 185 of the Income-tax Act, 1961 [Corresponding to section 26A of Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - Assessment year 1961-62 - ITO refused registration to firm on ground that share of profit given to one of partners was not in accordance with terms of partnership deed - Tribunal affirmed order of ITO without deciding question that whether share of profits to that partner had been paid in accordance with partnership deed - Whether matter should be remanded back to Tribunal for finding on that question - Held, yes FACTS The ITO refused to grant the renewal of registration to the firm on the ground that the share of profits given to the trust which was a partner in the firm, was not in accordance with the terms of the partnership deed. The AAC and the Tribunal dismissed the assessee's appeals. The Tribunal also dismissed the application filed by the revenue under section 66(1) of the 1922 Act. On application under section 66(2) of the 1922 Act : HELD It transpired from the statement of the case that the Tribunal, while dealing with the appeal of the assessee, did not decide the question, though raised before it, that the share of profits of the trust had been paid to it in accordance with the partnership deed. Without a decision on this question by the Tribunal it was not possible to answer the question as to whether, the Tribunal was right in law in holding that the income-tax authorities had erred in refusing renewal of registration to the firm under section 26A of the 1922 Act. The only course, therefore, open was to send back the case to the Tribunal for a finding on this question. The Tribunal was, therefore, directed to decide the question whether the division of profits, so far as the trust was concerned, was in accordance with the partnership deed and thereafter submit a better statement of the case. Note : The case was remanded back to the Tribunal. JUDGMENT At the instance of the department the Income-tax Appellate Tribunal in an application made under section 66(2) of the Indian Income-tax Act, 1922, has referred the following question of law for our opinion : "Whether, on the facts and in the circumstances of the…

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