Find a Lawyer

Income‑tax Reference No. 713 of 1972, decided on 6th October, 1983.

S. 26‑A‑Firm, registration of‑Reconstitution of firm‑Firm constituted on 26‑3‑1949 and granted registration from year to year --Partners of existing firm on 31‑12‑1968 admitting more partners in firm with effect from 1‑1‑1969‑No new partnership, held, came into being but a reconstitution of old firm took place and such firm not hit by S. 26‑A (5)‑Reconstituted firm was qualified for renewal of registration in circumstances.

Commissioner of Income‑tax, Rawalpindi v. Ahmed Shafi 1980 P T D 331; 1980 P T D 343; 1980 P T D 415 and P L D 1961 Kar. 90.

Iqbal Naeem Pasha for Appellant.

Waheed Farooqui for Respondent.

Date of hearing: 6th October, 1983.

. ‑The applicant has filed the above application, and the following two questions have been referred for our opinion: ‑

"(i) Whether there was any evidence with the Tribunal to hold that the firm constituted vide instrument of partnership dated 26‑3‑1949 had ceased to exist on 31‑12‑1968 and was not the same firm that continued carrying on business after the change in constitution on 1‑I‑1969

(ii) Whether the applicant 'firm was entitled to registration under section 26‑A of the Income‑tax Act, 1922 "

The learned Advocate for the applicant submitted, that these very questions have been decided by two reported cases namely Commissioner of Income‑tax, Rawalpindi v. Ahmad Shafi 1980 P T D 331, 1980 P T D 343 and 1980 P T D 415 as well as indirectly in the decision reported in P L D 1961 Kar. 90. The facts out of which the above reference arises are as follows: -

"That Messrs Shakoor Ali Muhammad and Sons, was originally a part nership firm consisting of two partners. The articles of partnership were embodied in a written instrument dated 26‑8‑1949. The names of the partners and the profit sharing ratio are set out hereinbelow: ‑

The firm was registered under section 59 of the Partnership Act with the Registrar of Firms, Hyderabad on 24‑10‑1963.

(2) That on 1‑1‑1969, there was a change in the constitution of the firm, which was evidenced by an instrument of partnership executed on 16‑6‑1969. The preamble of the instrument of partnership is reproduced hereunder: ‑

"Whereas the parties Nos. 1 and 2 were carrying on business in partnership with each other with effect from 22‑11‑1948 as per partnership deed, dated 26‑8‑1949 under terms and conditions already mutually agreed upon and whereas they desired to admit parties Nos. Three and Four in the partnership business with effect from 1st January. 1969 under terms and conditions already mutually agreed upon and whereas it is now deemed desirable to reduce those terms and conditions into writing. Now, therefore, this Indent witnesseth as under: ‑

The names of the partners and profit sharing ratio are set out herein below: ‑

Notice in regard to change in the constitution of the firm was given to the Registrar of Firms, Hyderabad, on 15‑11‑1969. vide Form 'E' dated 24‑10‑1969.

The Registrar of Firms, Hyderabad, made a record of the notice in the entry relating to the firm in the Register of Firms on 29‑1‑1973. A certified true copy of the Certificate issued by the Registrar of Firms, Hyderabad is annexed hereto and marked as Annexure 'A'.

Entry dated 29‑1‑1970 in the said certificate is reproduced hereunder: ‑‑

"The constitution of the firm has been altered by admission of two partners vie. Mr. Ibrahim s/o Abdul Shakoor and Gul Muhammad with effect from I‑1‑1969."

3. That the entire assets and liabilities of the firm as on 31‑12‑1968 continued to remain the property of the

4. That the Income‑tax Officer, 'B' Division, Hyderabad refused regis tration under section 26‑A of the Income‑tax Act vide his order dated 13‑3‑1971."

Being aggrieved by order dated 13th May, 1971 of the Income‑tax Officer B' Division, the applicant preferred an appeal before the Income‑tax Tribunal, but the same was dismissed by the impugned order dated 24‑11‑1971, and consequently the applicants approached the Tribunal for referring the above-mention two questions for opinion of this Court, and therefore, the above reference arose from the above facts. We have carefully gone through the judgments reported in 1980 P T D 331 and 1980 P T D 43 as well as P L D 1961 Kar. 90 and are in respectful agreement with the conclusion arrived at by these judgments for the reasons given therein.

We, therefore, answer question No. 1 in the negative and question No. 2 in the affirmative.

M. Z. M. Reference answered in affirmative.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.