Law:

Section:

Section 184 of the Income-tax Act, 1961 - Firm - Registration - Entitlement to - By a dissolution deed dated 28-12-1971 assessee-firm was dissolved and on same date a new partnership deed was executed reconstituting firm -Whether benefit of registration can be granted to firm even for a part of previous year and, therefore, assessee-firm was entitled to registration even though it was not in existence throughout previous year - Held, yes FACTS The assessee-firm originally consisted of two partners, namely, C and G with 4 minors admitted to the benefits of the partnership. On 28-12-1971 a dissolution deed was executed indicating that the said partnership was dissolved with effect from 19-10-1971. On the same day, a new partnership deed was executed showing that new partnership between G and N with 4 minors admitted to the benefits of partnership had come into existence from 28-10-1971. An application for registration of the firm was made on 25-4-1972 for the period 28-10-1971 to 5-11-1972. The ITO on finding that C who retired with effect from 19-10-1971 had continued to operate bank account during the period from 18-11-1971 to 30-12-1971, held that there was no genuine firm in existence and accordingly he refused registration to the firm. The AAC rejected the alternative plea that even if C had continued to be a partner in the firm up to 5-11-1972, the registration should have been granted at least from 6-1-1972 to 5-11-1972, relying upon the decision in CIT v. Kejriwal Traders [1969] 71 ITR 463 (Cal.) in which it was held that it was not possible to break the period of accounting year and allow piecemeal registration. The Tribunal, on appeal, found that facts of the case indicated that a new partnership in fact came into effect from 28-12-1971, i.e., when the partnership deed was executed and not from 28-10-1971. The Tribunal also, relying upon Kejriwal Traders' case (supra), negatived the contention of the assessee for granting registration for the period from 28-12-1971 to 5-11-1972. On reference: HELD There is no indication in the provisions of section 184 or section 185 that registration can begranted only if the firm remains in existence throughout the…

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