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] - Firm - Position prior to 1-4-1993 - Assessment year 1956-57 - Whether fact that there was no separate account of partners or that no share capital was contributed by some of partners originally is not a ground for refusing registration of firm - Held, yes FACTS For the assessment year 1956-57, the assessee made an application for registration of the firm as constituted under the partnership deed. The ITO held that the deed of partnership was not genuine and hence refused registration under section 26A of 1922 Act. On appeal the AAC took the same view. On further appeal, the Tribunal took the view that there was no separate account of the partners, the deed of partnership could not be registered under section 26A of 1922 Act. On reference : HELD The High Court in Shahabuddin Mohammad Raza v. CIT [1962] 46 ITR 203, pointed out that the fact that there was no separate account of the partners or that no share capital was contributed by some of the partners originally is not a ground for refusing registration of the firm. In instant case, there was no material before the income-tax authorities to support the conclusion that the partnership constituted under the partnership deed, was not a valid and genuine partnership. It was held that in the facts and circumstances of the case the firm constituted under the deed of partnership was a genuine partnership and should have been granted registration under section 26A of 1922 Act. Note : The case was decided in favour of the assessee. CASES REFERRED TO Umachran Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC), Sahabuddin Mohamed Raza v. CIT [1962] 46 ITR 203 (Pat.) and S. S. K. Haja Allauddin Maracair v. CIT [1952] 22 ITR 545 (Mad.). JUDGMENT Up to and including the assessment year 1955-56, Messrs. Himalaya Engineering Company, Hazaribagh, was constituted of two partners, (1) Shri Durga Ram, and (2) Shri Kirpa Ram, with equal shares. The firm was granted registration under section 26A for the years up to the assessment year 1955-56. For the assessment year 1956-57, the assessee made an application for registration of…

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