Commissioner of Income Tax vs Gopi Talkies

J.S. Verma, C.J.—This is a reference u/s 256(1) of the Income Tax Act, 1961, at the instance of the Revenue to answer the following question of law, viz. :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in directing the Income Tax Officer to allow continuation of registration till the date of the death of the deceased partner ?"

The material facts are these : The assessee claimed status as a registered firm in the return filed on June 30, 1975, for the assessment year 1975-76 for which the accounting period ended on November 13, 1974. During this period, one of the partners of the firm, viz., Gopiram, died on October 2, 1974. The assessee initially claimed the status of a registered firm for the entire period, including the period subsequent to the death of Gopiram. According to the terms of the partnership contained in the partnership deed, the provisions of the Partnership Act were applicable in respect of matters not specifically provided in the deed and in case of death of any partner, the firm was not to be dissolved, but the successors or representatives of the deceased partners were to be admitted in the firm. The Income Tax Officer treated the assessee as an unregistered firm for the entire period.

On appeal, the Appellate Assistant Commissioner reverted the order of the Income Tax Officer and held that the assessee-firm was entitled to the status of a registered firm for the entire year, i.e., even for the period subsequent to the death of Gopiram. On further appeal to the Appellate Tribunal by the Revenue, the order of the Appellate Assistant Commissioner has been partly modified. The Tribunal has accepted the alternative submissions of the assessee and held that the assessee-firm was entitled to the status of a registered firm and consequently continuation of its registration only up to the death of Gopiram, but not subsequent to it for the remaining period during that year. Aggrieved by the Tribunal''s view to this extent which has been taken in the assessee''s favour, the Revenue applied for a reference which has been made to answer the above question of law.

In our opinion, there is no flaw in the conclusion reached by the Tribunal that the assessee-firm was entitled to continuation of registration up to the date of death of Gopiram. Since registration has not been allowed by the Tribunal for the period subsequent to the death of Gopiram during that year, that part of the assessee''s initial case does not arise for consideration before us. Learned counsel for the Revenue was unable to show how this conclusion of the Tribunal is unjustified.

Consequently, the reference is answered against the Revenue and in favour of the assessee as under :

"The Tribunal was justified in directing the Income Tax Officer to allow continuation of registration till the date of death of the deceased partner, Gopiram."

There shall be no order as to costs.