KHEMJI WALJI AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER Section 66(1) of the Indian Income-tax Act the Appellate Tribunal at the instance of the assessee had referred the following question to us :-

(2.) THE assessee, Messrs. Khemji Walji and Co., Jharia, made an application under Section 26A of the Act in the prescribed form for registration but as the profits of the previous year were not dividend or credited as required by section B of the Schedule to rule 3 it was held that the application was defective, and hence registration was refused. THE argument of the assessee was that by clauses 3 and 14 of the partnership deed it was specifically provided that there shall be not distribution of profits unless the dues of second party by way of sums advanced and interest thereon are paid in full and therefore, he was within his right in not dividing the profit and was not bound to comply with that part of rule 3 which requires him to state that the profits had been divided. He also relied upon the definition in Section 2(6B) of the Act which provides that the words firm, partner and partnership have the same meanings respectively as in the Indian Partnership Act (Act IX of 1932). THEse contentions were overruled by the Income-tax authorities and by the Appellate Tribunal who held that the rules framed under Section 26A have the statutory force by reasons of the provisions of Section 59 and are not ultra vires.

(3.) IN my opinion, as was done in the two cases referred to above, the real question for decision is whether the assessee is entitled to have the partnership registered under Section 26A of the Act. The question which has been framed at the instance of the assessee is merely academic and does not arise for decision because even if we hold that the impugned rule is ultra vires the assessee will get no relief. Accordingly I would refrain from giving an answer to the question.