Punjab-Haryana High Court
Commissioner Of Income-Tax vs Jain Steel Rolling Mills on 15 November, 1988
Equivalent citations: [1989]177ITR498(P&H)
JUDGMENT Gokal Chand Mital, J.
1. The Income-tax Appellate Tribunal, Chandigarh, has referred the following questions for the opinion of this court for the assessment year 1973 74 :
"Whether the Tribunal has been in error in law in holding that the assessee-firm was entitled to registration under Section 185(1)(a) of the Income-tax Act, 1961, for the assessment year 1973-74 ?"
2. It arises out of the following facts. A partnership deed was drawn up on July 20, 1972, but, was brought into effect from June 1, 1972. An application for registration of the partnership was filed and when the matter was taken up by the Income-tax Officer, he found that Sunil Kumar, one of the partners, had attained majority on June 13, 1972, and since the partnership was made effective from June 1, 1972, when he was a minor, he refused to grant registration. The assessee failed before the Appellate Assistant Commissioner but on further appeal to the Tribunal, it was held that the Appellate Assistant Commissioner was in error in confirming the Income-tax Officer's decision in not registering the partnership on the reasoning that a partnership deed can be given retrospective operation as between the parties to serve a limited purpose for dating the accounts of profits and losses.
3. On behalf of the Revenue, Addl. CIT v. Uttam Kumar Pramod Kumar [1978] 115 ITR 796, a Full Bench judgment of the Allahabad High Court was cited, whereas, on behalf of the assessee, a decision of this court in Jagadhri Electric Supply and Industrial Co. v. CIT [1987] 166 ITR 143 and decisions of three other High Courts in CIT v. P. M. Syed Mohammed Kannu and Co. [1984] 149 ITR 441 (Ker), Modern Stores v. CIT [1986] 157 ITR 589 (AP), CIT v. Associate Industrial Distributors [1982] 138 ITR 304 (Cal) and Srinivasa Stainless Steel and Moulding Works v. CIT [1987] 167 ITR 1 (AP) were cited. On consideration of the matter, we find that the case in hand is fully covered by a decision of this court in Jagadhri Electric Supply's case [1987] 166 ITR 143, as the facts are identical. In the reported judgment, the partnership deed was executed on July 1, 1966, and it was made effective from April 1, 1966. One of the partners became major on June 3, 1966, that is, prior to the execution of the partnership deed, but after the date of making the partnership deed effective. The following rule was laid down (headnote) :
"that C had become a major prior to the close of the financial year when the profit and loss account was finalised and he was a full-fledged partner. Hence, it could not be said that the deed of partnership was not validly constituted."
4. In the case in hand, the minor had attained majority during the accounting year (previous year) and, therefore, could contract to share the profits and losses, even for a small period of 13 days during which he was a minor. In Uttam Kumar's case [1978] 115 ITR 796 (All) [FB], the facts were different, There, the minor had not attained majority during the accounting year and, therefore, it is clearly distinguishable. The facts being distinguishable, we need not go into the question whether the Calcutta and Andhra Pradesh High Courts were right in dissenting from the view of the Allahabad High Court. Since the matter is covered by a judgment of this court in favour of the assessee and against the Revenue, following that decision, we answer the question in the negative to the effect that the Tribunal did not err in holding that the assessee was entitled to registration for the assessment year 1973-74. However, there will be no order as to costs.