DILIPSINHJI P DESAI AND BROS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference under sec. 66(1) of the Indian Income Tax Act 1922 The assessee in this case is the firm of Dilipsinhji P. Desai & Bros. The assessment year with which we are concerned is the year 1954-55 the relevant accounting year being Samvat year 2009. Dilipsinhji P. Desai and Rajendrasinhji P. Desai executed a deed of partnership dated 1st July 1952 whereunder it was provided that they had to the benefits of the partnership of Dilipsinhji P. Desai & Bros. four minor brothers Laxmansinhji Kirtisinhji Chetansinhji and Sureshsinhji. It was provided that they had been so admitted to the benefits of the partnership from Kartak Sud 1 Samvat Year 2006 i.e. 21 October 1949. Out of the aforesaid four persons who were minors Sureshsinhji was born on 7th February 1951 i.e. long after 21st October 1949.

(2.) An application was made for registration of that firm under sec. 26A for the assessment year 1953-54 the accounting period being Samvat Year 2008 The firm was accorded registration under the provisions of the said sec. 26A. The firm continued its existence during the accounting Samvat Year 2009 the period being 19th October 1952 to 6th November 1953 Laxmansinhji who was a minor during Samvat Year 2008 attained majority on 29th June 1953 and elected to become a partner from 7th November 1953 i.e. Kartak Sud 1 Samvat Year 2010. On 30th January 1954 a new deed of partnership was executed showing Dilipsinhji Rajendrasinhji and the aforesaid Laxmansinhji as partners in the firm. Kirtisinhji Chetansinhji and Sureshsinhji were admitted to the benefits of that partnership on 23rd April 1954 an application was made for registration of the firm which existed during the accounting Samvat Year 2009. That application was signed only by Dilipsinhji and Rajendrasinhji. That application was considered by the Income Tax Officer who by his order dated 27th September 1958 refused to accord registration to the firm on the ground that Laxmansinhji who had attained majority on 29th June 1953 during the course of Samvat Year 2009 and who was an adult at the time when the application was made had not signed the application for registration. Another ground on which the application was refused was that Sureshsinhji who was not even born in Samvat Year 2006 had been given the benefit of the partnership from a date anterior to his birth. An appeal was filed before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took the view that registration had been wrongly refused and directed that registration should be granted. The matter was carried further to the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal took the view that the fact that Sureshsinhji was admitted to the benefit of the partnership from Kartak Sud 1 Samvat Year 2006 was not a valid ground for refusing registration as the firm as shown in the instrument of partnership was in existence during the relevant accounting period. The Tribunal however took the view that as Laxmansinhji had attained majority on 29th June 1953 it was necessary that the application for registration should have been signed by Laxmansinhji and as he had failed to sign the same registration was properly refused. At the instance of the assessee this reference has been made to us for the purpose of decision of the following question :-

(3.) The short point for determination is whether it was obligatory on Laxmansinhji to sign the application for renewal that had been made on 23 April 1954. The relevant rule which we have to consider in this connection is rule 6 framed by the Board of Inland Revenue in exercise of the powers conferred upon it by sec. 59 of the Indian Income Tax Act 1922 That rule runs as under :