- (1.) THE following question has been referred to us under Section 63 (1), Income Tax Act, by the income Tax Appellate Tribunal (Delhi Bench) : "whether a firm which comes into existence by oral agreement, is entitled to be registered under section 26a, if on the date of the application for registration the terms and conditions of the partnership have been reduced to writing and the application for registration is accompanied by such an Instrument?"
(2.) THE facts are that the assessee firm Messrs. Padam Parshad-Rattan Chand of Delhi started business as from 1-4-1947, and in the course of the assessment for the year 1948-39 relating to the account year ending on 31-3-1948 an application was made for registration of a partnership under Section 26a (1) on the basis of a partnership deed executed by the two partners, Rattan chand and Padam Parshad and specifying their shares in the partnership, on 10-4-1950. This application was dismissed by the income-tax Officer on 26-5-1950, and an appeal against his order was dismissed by the Appellate Assistant Commissioner who apparently had before him two appeals relating both to the assessment years 1948-49 and 1949-50. The ground of dismissal was that the profits had not been distributed between the partners.
(3.) A further appeal was made to the Appellate Tribunal which apparently only related to the year 1948-49. This appeal was also dismissed, but on a different ground, namely that according to the deed itself the partnership business had been carried on since 1-4-1941 and therefore the partnership could not be deemed to be constituted under an instrument dated 10-4-1950 within the meaning of Section 26-A. It was also held that such an instrument could certainly not apply to the account year ending in march 1948. The assessee firm thereupon moved the appellate Tribunal under Section 66 (1)with the result that the question set out above has been framed for our decision.;