Law:

Section:

Section 185 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 years 1958-59 and 1959-60 - Whether though power to refuse or grant registration is vested with ITO, its exercise is not discretionary - Held, yes - Whether where all requisites for granting registration as prescribed by statute were complied with by assessee firm, assessee was entitled to renewal of registration for years in question - Held, yes FACTS The assessee-firm was a genuine firm with two partners each having half a profit share. For the earlier years it had been granted registration. For the assessment years 1956-57 and 1957-58, the revenue, negativing the stand of the assessee that the Export House was the individual business of one 'R', included its income in the assessment of the firm. Registration was nevertheless granted for those two years too. On 1-7-1956, the International Export House was claimed to have been converted into a partnership consisting of four partners which were those members in assessee firm and two new members. Registration of this firm was refused on the ground that it was not a genuine partnership. For the assessment years 1958-59 and 1959-60, the ITO declined registration on the ground that the profits of the branch, International Export House, had not been apportioned between the two partners of assessee-firm but had been shared by the four partners of the new firm which was not found to be genuine. However, on appeal, the AAC as well as the Tribunal held that the assessee should be granted registration. On reference: HELD All the requisites for granting registration having been complied with, the assessee was entitled to renewal of registration for the years in question. The assessee no doubt took up the stand that the profits were divisible between four members and that did not prevail with the revenue for the assessment years 1958-59 and 1959-60. But that by itself, as the Tribunal rightly, held would not justify refusal to renew registration. Though the power is vested in the ITO, its exercise is not discretionary; but where the requisites for registration prescribed…

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