Law:

Section:

Section 184 of the Income-tax Act, 1961 - Firm - Registration - Entitlement to - In relevant assessment year assessee-firm, which had made an application for registration, had not allocated profits in accordance with terms of partnership deed inadvertently, though before assessment was completed it made correction and made allocation of profit in terms of partnership deed - Whether in view of aforesaid facts assessee was entitled to registration as aforesaid mistake was corrected before assessment - Held, yes Facts The assessee-firm had made an application for registration. In the relevant assessment year, the ITO noticed that the assessee had not allocated the profits in accordance with the terms of the partnership deed and, hence, refused the registration. The assessee contended before the ITO that inaccuracy in allocation of the profit in terms of the partnership deed was due to some inadvertence and that the same had been corrected much before the assessment. The ITO, however, did not pay any attention to this contention of the assessee and, thus, refused registration. On appeal, the Tribunal also upheld the ITO's order. On reference: Held The necessary reallocation of the shares in the profit and loss account was made by the assessee in terms of the partnership deed much before the assessment and the result was that the previous allocation was deemed to be substituted by this correction. The prescribed form of application (Form No. XI) also contemplates that the profit or loss would be divided before the assessment. The registration was refused only on the ground of clerical error in some entries made in the books of account. The assessee, in the present case, was, therefore, entitled to the registration and the order of the Tribunal was not justified. Cases referred to CIT v. Hari Ram Khanna 1978 Tax LR 245 (All.), CIT v. Krishna Steels [1980] 124 ITR 47 (All.) and Mandyala Govindu & Co. v. CIT[1976] 102 ITR 1 (SC). A. Pasayat for the Applicant. JUDGMENT Agrawal, CJ. - The Tribunal, Cuttack Bench has drawn up a statement of case and referred the following question of law for the opinion of this Court: "Whether, on the facts and in the circumstances of…

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