CIT V. JAYALAKSHMI RICE AND OIL MILLS CONTRACTOR CO.
AIR 1971 SC 1015 : (1971) 1 SCC 280
FACTS
The assessee firm was established under a partnership deed dated October 6, 1955, to come into effect from November 5, 1954.
An application for registration under Section 26-A of the Income Tax Act for the assessment year 1956-57 was filed, with the "previous year" ending on October 26, 1955.
The application was received by the Income-tax Officer on October 14, 1955.
Subsequently, on October 20, 1955, a statement under Section 58 of the Indian Partnership Act, 1932, was filed with the Registrar of Firms.The Registrar of Firms filed the statement on November 2, 1955, and made entries in the register of firms.
However, on March 23, 1961, the Income-tax Officer refused registration under Section 26-A, stating that the application was not made in time.
ISSUE
The primary issue was whether the registration of the firm under the Partnership Act should be deemed to have occurred on the date of application filing or only upon entry in the register of firms by the Registrar.
JUDGEMENT
The Court held that registration of a firm under the Partnership Act only occurs when the necessary entry is made in the register of firms by the Registrar, not merely upon the filing of an application.
LEGAL ANALYSIS
The Court reasoned that Section 58(1) of the Partnership Act, which allows for registration by sending an application, must be read in conjunction with Section 59, which specifies that registration occurs upon entry in the register of firms.
It emphasised that the language of Section 58(1) alone might suggest registration upon application filing, but the overall scheme of the Act, including Section 59 and Section 69, clarifies that registration occurs only upon entry by the Registrar.
The Kerala High Court's decision in Kerala Road Lines Corporation v. Commissioner of Income-tax Kerala was referenced, which established that registration occurs only upon entry in the register of firms.
Therefore, the firm was not deemed registered on the date of application filing but on the date of entry in the register of firms, as per Section 59 of the Partnership Act.