S.P. Sinha, J. - (1.) THE Patna Bench of the Income-tax Appellate Tribunal has made these references, which this court by order dated 20th July, 1973, has taken as references made under Section 66(1) of the Indian I. T. Act, 1922, in place of references under Section 256(1) of the I. T. Act, 1961, as stated by the Tribunal.
(2.) BOTH these matters relate to orders passed under Section 26A of the Indian I. T. Act, 1922 (hereinafter referred to as the "Act"). The question which has been referred to this court for opinion is : "Whether the entity styled Messrs. C.I.O. Full Mould Tyre Re-treaders (India), Jamshedpur, which filed its return of income as a firm and also applied for registration is entitled to registration under Section 26A of the Indian I. T. Act, 1922, for the assessment years 1959-60 and 1960-61 ?" The facts relevant may be briefly stated. The assessment years for which the claim for registration under Section 26A was made by the assessee are 1959-60 and 1960-61, for which the respective relevant accounting periods are January 1, 1959, to January 31, 1959, and April 1, 1959, to March 31, I960. Admittedly, up to 31st December, 1958, the business was a proprietary concern of one C.I. Chakko. On and from the 1st January, 1959, the said business is said to have been converted into a partnership firm, the original proprietor and two other persons, namely, C.I. George and Baby Peters, having joined in as partners. A partnership deed was executed on the 1st January, 1959, and the same was registered under the Indian Registration Act on the 17th January, 1959. The shares of the respective partners in the partnership were as follows : JUDGEMENT_505_ITR116_1979Html1.htm For the assessment year 1959-60, application under Section 26A of the Act claiming registration of the firm was filed late on the 18th April, 1959, but has been entertained by the ITO. Similarly, the application under Section 26A of the Act for the assessment year 1960-61 was entertained, though filed late, along with the return of income, on the 27th July, 1960.
(3.) THE ITO refused to register the partnership for the said two assessment years on two grounds : (1) that no genuine firm had come into existence ; and (2) the profits of the relevant years had not been divided between the partners. On appeal, the AAC reversed both the findings of the ITO and found that the firm was genuine and the reason for non-division of the profits of the previous year relevant to the assessment year 1959-60 had been duly explained. Relying upon the reasons for allowing the claim for registra- tion of the partnership for the assessment year 19519-60, the AAC allowed the claim of registration for the assessment year 1960-61 also. The department appealed to the Tribunal against the AAC's order for both the assessment years. The Tribunal, by separate orders passed in respect of the two assessment years, reversed the decision of the AAC. So far as the question relating to the genuineness or otherwise of the firm was concerned, the Tribunal did not give any specific finding. The Tribunal, however, agreed with the ITO's view that the profits accruing to the firm for the relevant previous years had not been divided between the partners even after the end of the relevant previous years, and this was contrary to the requirements of law. At the instance of the assessee, the Tribunal has made the reference on the question of law aforesaid. ;