Commissioner of Income Tax vs R.S. Thangapalam

Veeraswami, J.—The Tribunal having agreed with the Appellate Assistant Commissioner that the assessee should be granted registration for

the assessment year 1958-59 and 1959-60, the Commissioner of Income Tax has come up with this reference, which perhaps need never have

been made at all. R. S. Thangapalam was admittedly a genuine firm with two partners, each having a half share, its constitution being on September

22, 1953. For the earlier years it had been granted registration. For the assessment years 1956-57 and 1957-58, the revenue, negativing the stand

of the assessee that the International Export House was the individual business of one R. S. Muthiah, included its income in the assessment of the

firm. Registration was nevertheless granted for those two years too. On July 1, 1956, the International Export House was claimed to have been

converted into a partnership consisting of four partners which were those members in Thangapalam and two new members. Registration of this firm

was refused on the ground that it was not a genuine partnership and the matter does not appear to have been pursued. For the years in question

the Income Tax Officer declined registration on the ground that the profits of the branch, International Export House, had not been apportioned

between the two partners of Thangapalam but had been shared by the four partners of the new firm which was not found to be genuine. The same

view was taken in respect of the assessment year 1959-60. Before the Appellate Assistant Commissioner the assessee filed a declaration that at

the close of the accounting period ended June 30, 1963, the two partners would divide the profits of the International Export House between

them. His findings were that R. S. Thangapalam was a genuine firm and that all the statutory requirements for registration of the firm had been

complied with. He thought therefore that merely because the profits of Thangapalam were supposed to be shared, on the stand the assessee took,

between four partners of the International Export House, which stand was not accepted by the revenue, it did not follow that on that ground

registration should be refused. With that view the Tribunal concurred. The question before us is :

Whether, on the facts and in the circumstances of the case, the grant of registration to the assessee for the assessment years 1958-59 and 1959-

60 is justified in law ?

We are of the view that the Tribunal did the right thing. All the requisites for granting registration having been complied with, the assessee was

entitled to renewal of registration for the years in question. The assessee no doubt took up the stand that the profits were divisible between four

members and that did not prevail with the revenue for the assessment years 1958-59 and 1959-60. But that by itself, as the Tribunal rightly held,

would not justify refusal to renew registration. Though the power is vested in the Income Tax Officer, its exercise is not discretionary; but where

the requisites for registration prescribed by the statute and the rules made thereunder are satisfied, it has to be given as a matter of right :

Commissioner of Income Tax, Gujarat Vs. A. Abdul Rahim and Co., .

We answer the question against the revenue with costs, counsel''s fee Rs. 250.