Law: Income Tax Act, 1922

Section: 26A

Section 184 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922, read with rules 3, 4 and 6 of the Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - Assessment year 1958-59 - Assessee-firm, which was constituted under deed of partnership executed on 1-4-1947 with effect from 18-4-1946 for fixed period of five years, continued to carry on business after expiry of period of five years on 17-4-1951 without executing fresh deed of partnership - It sought renewal of registration for assessment year in question under section 26A on basis of same partnership deed - Whether for purpose of registration of renewal of registration of firm under section 26A, there must be an instrument or partnership and deed must be operative in year relating to which registration/renewal of registration is asked for - Held, yes - Whether, since in instant case instrument of partnership under which assessee-firm was constituted ceased to be operative on 17-4-1951, it was not entitled to renewal of registration for year in question - Held, yes FACTS The assessee, a partnership-firm consisting of three partners, entered into partnership agreement on 18-4-1946. The terms and conditions on which they agreed to do partnership business were reduced to writing in a deed executed on 1-4-1947. The partnership was constituted for five years from 18-4-1946 which expired on 17-4-1951. Even though the period mentioned in the aforesaid deed had expired on 17-4-1951, the partnership business continued in the calendar year 1957 relevant to assessment year 1958-59. The assessee-firm applied for renewal of registration of the partnership for that assessment year on 17-6-1958. The Income-tax authorities refused to grant registration and rejected the application. The Tribunal also affirmed the view taken by the Income-tax authorities. On reference : HELD There is a vital difference between the two types of partnership, i.e., partnership for a fixed duration under a deed of partnership and the partnership that continues to carry on the business after the expiry of the period mentioned in the deed. In the one case, it is a partnership for a fixed…

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