GANESH LAL LAXMI NARAIN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred this case for the opinion of this court on the following question:

(2.) UNDER a deed of partnership executed on January 10, 1948, a firm was constituted for the purpose of carrying on business in the name and style of M/s. Ganeshi Lal Lakshmi Narain Lal. The members of the firm were Muneshwar Prasad and Satchidanand, an one Om Kumar, a minor, was admitted to the benefits of partnership. The partnership firm was registered annually under section 26A up to and inclusive of the assessment year 1958-59. For the assessment year 1959-60 an application for renewal of registration signed by Muneshwar Prasad, Satchidanand and Om Kumar was filed before the Income-tax Officer. It appears that Om Kumar had meanwhile attained majority and had, therefore, signed the application for renewal of registration. In the application there was a specific statement to the effect that the annual profits of the firm had been divided between the partners. The Income-tax Officer rejected the application on two grounds. He found that upon Om Kumar becoming a major, no fresh partnership deed had been executed. He also found that the profits of the business carried on under the name "Standard Hotel" had not been divided at the Appellate Assistant Commissioner, who allowed the appeal and directed renewal of registration. The Income-tax Officer proceeded in appeal to the Income- tax Appellate Tribunal, and the Tribunal, accepting the contentions that the original instrument of partnership was not acceptable as a basis for renewing registration of the firm and that the omission of the assessee to divide the annual profits of the Standard Hotel business was fatal to the application, allowed the appeal and dismissed the application for renewal of registration. At the instance of the assessee the case has been referred to this court.

(3.) AS regards the second ground upon which registration has been refused, learned counsel for the assessee contends that it was not incumbent upon the members of the assessee-firm to divide the profits at the end of the previous years. Now, it seems clear that, in order to enjoy the benefit of registration under section 26A, it is necessary that the assessee should strictly comply with all the requirements of the income-tax law pertaining to the grant of with all the requirements of the income- tax law pertaining to the grant of registration. The law requires that the profits should be divided or credited annually between the partners and it is necessary for a firm applying for registration to state that in the application: (Surajmalls v. Commissioner of Income-tax). Indeed, in the instant case such statement was made in the application but there is no dispute that the annual profits of the Standard Hotel business were neither divided nor credited between the partners. That being so, it is clear that the Income-tax Officer was justified in refusing to register the assessee-firm on that ground also. We answer the question referred to this court in the affirmative.