DUGAL G S AND CO PVT LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question in this reference whether the assessee firm is entitled to registration and renewal of registration has been very strenuously argued both on behalf of the assessee -firm as well as the revenue. The statement of the case relates to the assessment years 1952 -53, 1953 -54, and 1954 -55. Under the instrument of partnership dated April 5, 1950, the assessee was purported to be constituted as a firm. The instrument of partnership showed that the partnership was to consist of three partners, namely, Messrs. G. S. Dugal and Co. Ltd., a firm by name, Messrs. Bishan Singh Jaswant Singh and an individual by name, S. Lakhinder Singh. The shares of M/s G. S. Dugal and Co. Ltd. and the firm of Messrs. Bishan Singh Jaswant Singh were respectively 7 annas in a rupee and the share of the third partner, S. Lakhinder Singh, was 2 annas in a rupee. This instrument of partnership was signed on behalf of G. S. Dugal and Co. Ltd. by its managing director, G. S. Dugal, on behalf of the firm M/s. Bishan Singh Jaswant Singh by its partner, Tej Singh, and by the third partner as an individual. In the books of account maintained by the assessee, 7 annas share of profit was credited to the account of Messrs. Bishan Singh Jaswant Singh for all the three assessment years and no credit was made in the names of the four individual partners of the firm of Messrs. Bishan Singh Jaswant Singh. In the returns of income filed by the assessee for all the assessment years under consideration the assessee -firm has stated that the firm of Messrs. Bishan Singh Jaswant Singh was one of the partners of the assessee with 7 annas share in the profit and losses.

(2.) ON May 10, 1950, a declaration was signed in the matter of partnership agreement dated April 5, 1950, whereby the individual partners of the firm of Messrs. Bishan Singh Jaswant Singh declared their individual shares in the assessee -partnership as being equal in proportion, i.e., one anna nine pies each. The declaration was signed by the four individual partners of the firm of Messrs. Bishan Singh Jaswant Singh and was attested by two witnesses. Below the signatures of the witnesses, under the remark 'noted', it was signed by S. Lakhinder Singh and by Messrs. G. S. Dugal and Co. Ltd. by its managing director.

(3.) FOR the assessment year 1951 -52, the Income -tax Officer did not allow registration to the assessee but treated the firm as an unregistered firm under section 23(5)(b) of the Indian Income -tax Act, 1922 (hereinafter referred to as 'the Act'). The assessee also filed application for renewal of registration for the assessment years 1952 -53, 1953 -54 and 1954 -55. The applications for the first two years were filed on June 30, 1953, and the application for the third year was filed on June 28, 1954. All the three applications for renewal were signed, inter alia, by Tej Singh, one of the partners, on behalf of Messrs. Bishan Singh Jaswant Singh. However, later on, on March 14, 1958, the assessee filed three separate applications for renewal of registration of the assessee under section 26A of the Act for the three assessment years 1952 -53, 1953 -54 and 1954 -55. All these three applications for the three assessment years were signed on behalf of G. S. Dugal and Co. Ltd. by its managing director and by Lakhinder Singh. They were also signed by the four partners of the partnership firm of M/s. Bishan Singh Jaswant Singh. Later on, on April 23, 1958, an application for registration of the assessee -firm was filed section 26A of the Act for the assessment year 1952 -53.