Law:

Section:

Section 185 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] read with rule 2 of the Indian Income-tax Rules 1922 and sections 58 and 59 of the Indian Partnership Act, 1932 - Firm - Position prior to 1-4-1993 - Assessment year 1956-57 - Assessee's previous year relevant to assessment year in question ended on 20-10-1955 and firm filed before Registrar of Firm statement under section 58 and on 2-1-1955 Registrar filed said statement and made entries in Register of firms - Assessee firm's application for registration under section 26A of 1922 Act was rejected by ITO on ground that same was not made in time under rule 2(a) - However, decision of ITO was reversed by High Court on ground that application had been filed in time - Whether registration of a firm takes place only when necessary entry is made in register of firms under section 59 of Partnership Act by the Registrar - Held, yes - Whether it could not be said that partnership should be deemed to have been registered on date when application was presented and that requirement of rule 2(b) would be satisfied if it became registered under Partnership Act even after application was filed - Held, yes - Whether therefore, ITO was justified in refusing to register firm under section 26A of 1922 Act - Held, yes FACTS The assessee-firm was constituted under a deed of partnership dated 6-10-1955. It was to come into existence with effect from 5-11-1954. The assessee filed an application under section 26A of the Act for registration of the firm for the assessment year 1956-57. The 'previous year' of the firm was shown as the year ending 26-10-1955. This application was received by the ITO on 14-10-1955. On 20-10-1955, the assessee filed before the Registrar of Firms a statement under section 58 of the Indian Partnership Act, 1932. On 2-11-1955, the Registrar of Firms filed the statement of the assessee and made entries in the register of firms. On 23-3-1961, the ITO passed an order refusing to register the firm under section 26A, inter alia, for the reason that the application had not been made in time. The appeal taken to the AAC by the assessee failed. The Income-tax…

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