V.G. Oak, C.J. - (1.) THIS is a reference under Section 66(1) of the Indian Income-tax Act, 1922, hereafter referred to as the Act. Messrs. Panna Lal Babu Lal is the assessee. THIS firm was constituted under a deed of partnership executed on November 30, 1942. At that time there were four partners: 1. Babu Lal, 2. Sura] Prasad, 3. Girdharilal and 4. Pannalal. The firm was registered under Section 26A of the Act for the assessment year 1944-45. Registration was renewed from year to year up to the assessment year 1956-57. Girdharilal, partner, died in July, 1954, during the accounting period corresponding to the assessment year 1955-56. In spite of Girdharilal's death, registration was renewed for the assessment years 1955-56 and 1956-57. An application for renewal of registration was filed for the assessment year 1957-58. THIS application for renewal was signed by Babu Lal, Suraj Prasad, Panna Lal and one Hari Shanker. It was explained on behalf of the firm that Girdharilal was dead ; and his share in the partnership is now represented by his son, Hari Shanker. The Income-tax Officer concluded that on these facts the firm was not entitled to renewal of registration. The application for renewal was, therefore, dismissed. The decision was upheld in appeal by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal, Allahabad. At the request of the assessee, the Tribunal has referred to this court the following question of law : "Whether, on the facts and in the circumstances of the case, the renewal of registration under Section 26A was rightly refused ? "
(2.) IT will be seen that Girdharilal was a partner of the firm, when it was constituted in the year 1942. He died between the constitution of the firm and the application for registration for the year 1957-58. The question, therefore, arose whether renewal could be granted on the basis of the original deed of partnership, dated November 30, 1942. When the matter went before the Appellate Assistant Commissioner, the assessee filed another document dated July 19, 1954, purporting to be a supplementary deed of partnership. Both the Tribunal and the Appellate Assistant Commissioner concluded that this document was suspicious, and could not be relied upon. So, for purposes of the present reference, we have to ignore the document, dated July 19, 1954. The question is whether the original deed of partnership, dated November 30, 1942, was sufficient for the purposes of renewal of registration. Section 26A of the Act laid down the procedure in the registration of firms. Section 26A ran thus : " (1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act ...... (2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed. ....." It will be seen that Section 26A lays down two conditions. Firstly, an application must be supported by an instrument of partnership specifying the shares of partners. Secondly, the application must be in the prescribed form. We have to examine whether the assessee in the instant case fulfilled the two conditions.
(3.) IT was urged for the department that renewal was rightly refused in the present case, because the applicant firm did not produce any deed of partnership, and there was change in the constitution of the firm between 1942 and the assessment year. In the case of Makerwal Colliery, In re, [1942] 10 I.T.R. 422 the facts were these A and B entered into a partnership for a fixed period. One of the clauses in the deed provided that the death of either partner shall not terminate the partnership business, and the legal representative of a deceased partner shall be entitled to the benefit of the said lease from Government jointly and equally with the surviving partner. A, by his will, appointed three persons as trustees of his own property, and directed that the trustees should carry on, or join in carrying on as they might think fit, the trade or business carried on by him in partnership with B. A died, and the trustees applied for registration of the firm or for renewal of registration of the firm. It was held that the trustees could not take the place of A in the absence of a special agreement to that effect. Mohammad Munir J. observed on page 429: " Where in a partnership constituted by a deed of partnership for a fixed period the legal representatives of a deceased partner, who by reason of a provision in the deed are entitled, but not bound, to come in as partners in place of the deceased partner for a period which may be the same as, or different from, the period fixed by the deed, elect to continue the partnership for the unexpired portion of the period, the constitution of the firm is altered and therefore the new firm cannot apply for the renewal of registration." ;