2001 PLP 3512 (PTD)
COMMISSIONER OF INCOME‑TAX Versus TAMIL PUT.HAKALAYAM
| Citation | 2001 PLP 3512 (PTD) |
| Forum / Court | 240 I T R 599 |
| Bench Members | N. V. Balasubramanian and. P. Thangavel, JJ |
| Parties | COMMISSIONER OF INCOME‑TAX Versus TAMIL PUT.HAKALAYAM |
Q1: What are the key laws and sections cited in 2001 PLP 3512 (PTD)?
This judgment primarily cites: statutory provisions as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 2001 PLP 3512 (PTD)?
The case was heard and decided by the 240 I T R 599 bench comprising: N. V. Balasubramanian and. P. Thangavel, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 2001 PLP 3512 (PTD) (COMMISSIONER OF INCOME‑TAX Versus TAMIL PUT.HAKALAYAM). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Headnotes / Summary
(a) Income‑tax‑‑ ‑‑‑‑Firm‑‑‑Registration‑‑Condition precedent‑‑‑Specification of shares of losses‑‑‑Firm consisting of adult partners and a minor admitted to benefits of partnership‑‑‑Statement in partnership deed that term "partner" would mean adult partners‑‑‑Partnership deed providing that profits and losses would be shared equally‑‑‑Provision did not mean that minor would be liable to bear losses‑‑‑Firm was entitled to registration‑‑‑Indian Income Tax Act, 1961, S.184. Under the provisions of section 185(2) of the Income Tax Act, 1961, which was substituted by 'section 34 of the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, there is a duty cast upon the Income‑tax Officer when he considers that the application for registration is not in order, to intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation. s The assessee‑firm consisted of three partners and a minor admitted to the benefits of partnership. In sub‑paragraph (3) of the partnership deed, it was clearly stated that the adult members would be the partners. The capital of the partnership firm was stated to be Rs. 5,004 contributed equally by all the four. Clause 12 of the deed laid down that the profits and losses would be divided among the partners equally. According to the Income‑tax Officer, the share of the loss cannot be apportioned to a minor and since clause 12 provided that the loss of the firm shall be divided between the partners equally, there was no specification in the deed with regard to the division of the loss of the firm. He refused to register the firm. The Appellate Assistant Commissioner upheld the decision. He also noticed another defect and held that in the application for registration in Form No. IIA, the letter "P" was not mentioned against the share of the partner, who was entitled to the share in profits, but was not liable to bear a similar proportion of any loss. According to the Appellate Assistant Commissioner, since the letter "P" was not mentioned against the share of the minor who was admitted to the benefits of the partnership, the firm did not comply with the requirements of the rules. On further appeal, the Tribunal considered the document and found that the term "partner" according to the partnership deed meant only major partners. According to the Tribunal, when clause 12 provided that the loss should be shared by the partners, the loss of the assessee‑firm should be borne by the adult partners and the minor who was admitted to the benefits of the partnership was not liable to share the loss. In so far as the defect pointed by the Appellate Assistant Commissioner and found in Form No. 11A was concerned, the Tribunal held that the defect was curable and directed the Income‑tax Officer to give an opportunity to the assessee‑firm to rectify the defect in Form NO. I IA filed by the firm and then register it. On a reference: Held, that a fair reading of the partnership deed clearly indicated that the losses should be shared only by the adult partners and the minor who was admitted to the benefits of the partnership was not made to bear the loss. The instrument of partnership also clearly specified the manner of division of losses among the three major and adult partners. The absence of the expression "P" in Form No. 11A could be considered only as a defect in the application and would not render the application void and non est in law. The Tribunal was justified in holding that the deed of partnership specified the shares of losses and was also justified in directing the Income‑tax Officer to give an opportunity to the assessee firm to rectify the defect found in Form NO. I IA filed by it. Mandyala Govindu & Co. v. CIT (1976) 102 ITR 1 (SC); Progressive Financers v. CIT (1997) 224 ITR 595 (SC) and Sri Ramamohan Motor Service v. CIT (1973) 89 ITR 274 (SC) ref. ‑‑‑‑Firm‑‑‑Registration‑‑‑Application for--registration‑‑‑Defect in application opportunity must be given for rectification of defect‑‑‑Indian Income Tax Act, 1961, S.185. C. V. Rajan for the Commissioner. Nemo for the Assessee.
Judgment & Decree
"Form No. 11A (Application for registration of a firm for the purpose of the Income Tax Act, 1961) To The Income‑tax Officer????????? ??????????? Regarding: Assessment year 20?????.20?????
1. We, on behalf of ???????..(name of the firm) hereby apply for the registration of our firm for the purposes of the Income Tax Act, 1961 for the assessment year 20??..20??.. Date???????????????????????????????????????? Signature????????????????????????????????????????????? Address 1. 2. 3.
4. Name of the partner Partner Date of admittance to partnership??????????? *Interest on capital? or loans (if any)????? *Salary, commission or other remuneration from firm??????????? ??????????? Remarks (1) (2) (3) (4) (5) (6) (7) (A) ..................... (B) ..................... Notes.‑‑‑ If any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses, this fact should be indicated by putting against his share in column 6 the letter ' P'."? It is no doubt true that the firm should indicate by including an appropriate entry into the form when a partner is not liable to bear the loss, but is sharing only the profit. The question that arises is whether such as commission can render the application filed, which is otherwise complete in other respects, invalid and fatal. It is significant to notice that the decision of the Supreme Court cited supra arose under the corresponding provision of the Indian Income‑tax Act, 1922, and the relevant provision which the Supreme Court considered was section 26A of the 1922 Act. On the other and, the assessment year which we are concerned is 1977‑78 and under the provision of section 185(2) of the Income Tax Act, 1961, which has been substituted by section 34, the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, there is a duty cast upon the Income‑tax Officer when he considers that the application for registration is not in order to intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation. It is admitted that there is no similar provision in the old Act. In the light of section 185(2) of the Act, while considering the application for registration, when the Income‑tax Officer finds that the application is not in order, he must give an opportunity to the firm to rectify the defect found in the application. The absence of the expression "P" in Form No.11A can be considered as only a defect in the application and would not render the application void and non est in law to be ignored by the Income‑tax Officer. Therefore, when the application is not in order and is not in accordance with the relevant terms of the instrument of partnership, it is incumbent on the Income‑tai Officer to give an opportunity to the firm to rectify the defect found in the application. Since the Income‑tax Officer has not granted the opportunity to the firm to rectify the defect found in the application, the Tribunal has naturally directed the Income‑tax Officer to give an opportunity to the firm to rectify the defect. We do not find any infirmity in the order of he Tribunal in directing the Income‑tax Officer to give an opportunity to the assessee‑firm to rectify the defect in Form No. 11A. The Appellate Tribunal has acted in accordance with the provisions of section 185(2) of the Act. It is also significant to notice that the Supreme Court in Sri Ramamohan Motor Service v. CIT (1973) 89 ITR 274, has noticed the provisions of section 185(2) of the Act and held that section 185, is not retrospective in operation. In so far as the present case is concerned, the assessment year is 1977‑78 and the provisions of section 185(2) would be applicable to the facts of the case. Therefore, when the Income‑tax Officer concerned found that the application for registration was not in order, he should have given an opportunity to the firm to rectify the defect found in the application and the Tribunal, by directing the officer to act in accordance with the law, cannot be said to have acted beyond the parameter of the law. In this view of the are of the view that the Appellate Tribunal was justified in the deed of partnership specified the shares of losses and was I in directing the Income‑tax Officer to give an opportunity to the assessee‑firm to rectify the defect found in Form No.11A filed by it. Therefore, we are of the view that the question of law referred to us is liable to be answered against the Revenue. In the result, we answer the question referred to us in the affirma?tive and against the Revenue. However, there will be no order as to costs. M.B.A./352/FC?????????????????????????????????????????????????????????????????????? Reference answered.