Case ID: 3144

Judgment:
Appeal No. 1690 of 1969. Appeal by special leave from the judgment and order dated July 15	 1968 of the Delhi High Court at New Delhi in Incometax Reference No. 44 of 1964. G.C. Sharma	 R. Chawla	 section R. Gupta	 R. P. Soni and K. B. Rohtagi for the appellant. F. section Nariman	 Addl. Solicitor General of India	 A. N. Kirpal	 section P. Nayar and R.N. Sachthey for the respondent. The Judgment of the Court was delivered by HEGDE	 J. This is an appeal by special leave. The appellant is the assesssee. In this case we are concerned with his assessment for the assessment year 1958 59. The relevant previous year ended on March 31	 1958. The assesses firm applied for renewal of its registration under section 26(A) of the Indian Income Tax Act 1922 (in short 'the Act ') before the Income Tax Officer on May 26	 1958. In that application he mentioned that the previous years ' income had been divided among the partners. The Income Tax Officer rejected that application. He did not believe the version of the assessee that the previous years ' income 77 had been divided. In appeal	 the Appellate Assistant Commissioner agreed with the conclusion reached by the Income tax Officer. On a further appeal being taken to the Income tax Appellate Tribunal the Tribunal agreed with the conclusions reached by the lower authorities. Before the Tribunal yet another contention appears to have been taken. That contention was that at any rate the partners having divided the income of the previous year as evidenced by the balance sheet before the assessment Was made	 the assessee firm was entitled for its registration under section 26(A). The Tribunal did not go into that question. The High Court agreed with the view taken by the Tribunal. The only question that arises for decision in this case is whether it was incumbent on the part of the assessee to have divided the profits of the previous year before it made its application for renewal of the registration certificate. For deciding this question it is necessary to refer to the relevant provisions of the Act as well as the Rules. Section 26 (A) of the Act reads. thus. "26A. Procedure in registration of firms (1) Application may be made to the Income tax Officer on behalf of any firm	 constituted under an instrument of partnership specifying the individual shares of the partners	 for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons	 and at such times and small contain such particulars and shall be in such form	 and be verified in such manner	 as may be prescribed; and it shall be dealt with by the income tax Officer in such manner as may be prescribed. " Turning to the relevant Rules	 they are found in Rules 2	 3 and 6. These Rules read thus: "Rule 2 Any firm constituted under an Instrument of Partnership specifying the individual shares of the partners may	 under the provisions of section 26A of the Indian Income tax Act	 1922 (hereinafter in these rules referred to as the Act)	 register with the Incometax Officer	 the particulars contained in the said Instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally	 or in the case of a dis 78 solved firm by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such partner who is deceased and shall	 for any year of assessment UP to and including the	 assessment for the year ending on the 31st day of March	 1953	 be made before the 28th February	 1953	 and for any year of assessment subsequent thereto	 be made. (a)Where the firm is not registered under the (TX of 1932)	 or where the deed of partnership is not registered under the Indian (XVI of 1908)	 and the application for registration is being made for the first time under the Act. (i) within a period of six months of the constitution of the firm or before the end of the "previous year" of the firm whichever is earlier	 if the firm was constituted in that previous year	 (ii)before the end of the previous year in any other case. (b) where the firm is registered under the (TX of 1932)	 or where the deed of partnership is registered under the Indian (XVI of 1908)	 before the end of the previous year of the firm	 and (c)where the application is for renewal of registration under Rule 6 for any year	 before the 30th day of June of that year : Provided that the	 Income tax Officer may entertain an application made after the expiry of the time limit specified in this rule	 if he is satisfied that the firm was prevented by sufficient cause from making the application within the specified time . Rule 3 The application referred to in Rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted	 together with a copy thereof : provided that if the Income tax Officer is satisfied that for some sufficient reason the original Instrument cannot conveniently be produced	 be may accept a copy of it certified in writing by all the partners (not being minors) or	 where the application is made after dissolution of the firm	 by all the persons 79 referred to in the said Rule	 to be correct copy	 and in such a case the application shall be accompanied by a duplicate copy. FORM I FORM OF APPLICATION FOR REGISTRATION OF A FIRM UNDER SECTION 26A OF THE INDIAN INCOME TAX ACT	 1922. TO The Income tax Officer	 Dated 19 Income tax year 19 19 1. . . . 2. . . 3.We do hereby certify that the profits (or loss if any ) of the previous year were/will be (period upto the date of dissolution were/will be) divided or credited as shown in section B of the Schedule and that the information given above and in the attached Schedule is correct. (Signatures) (Address) Note : This application must be signed. . . SCHEDULE Name of Address Date of (1) (1) (2) partner admitt Interest Salaryor Share in REMARKS ance to on capital commis the bal partner or loans sion from ance of ship. (if any) firm profits (or loss) etc. 1 2 3 4 5 6 7 (A)Particulars of the firm as constituted at the date of this application. 80 (B) Particulars of the apportionment of the income	 profits or gains (or loss) of the business	 profession or vocation in the previous year between the partners who in that previous year were	 entitled to share in such income	 profits or gains (or loss). Applicable where the application is made after the end of the relevant previous year). Note: (I) If the interest	 salary and/or commission . . . . . . . . column with the letter "R". (In other cases the interest	 salary and/or commissionmay exceed the total profits so as to leave a balance of net loss divisible in column 6). (2)If any partner is entitled to share in profits but is not liable to bear a similar proportion of any losses this fact should be indicated by putting against his share in column 6 the letter "P". Rule 6 Any firm to whom a certificate of registration has been granted under Rule 4 may apply to the Income tax Officer to have the certificate of registration renewed for a subsequent year. Such application shall be signed personally by all the partners (not being minors) of the firm or	 where the application is made after dissolution of the firm	 by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased	 and accompanied by a certificate in the form set out below. The application shall be made before the 30th day of June of the year for which assessment is to be made provided that the Income tax Officer may entertain an application made after the expiry of the said date	 if he is satisfied that the firm was prevented by sufficient cause from making the application before that date. FORM OF APPLICATION FOR THE RENEWAL OF REGISTRATION OF A FIRM LTNDER SECTION 26A OF THE INDIAN INCOME TAX ACT	 1922 TO The Income tax Officer Dated 19 Assessment for the Income tax Year 19 /19 1. . . 2. . . . 81 3.We do hereby further certify that the profits (or loss if any) of the previous year were/period up to the date of dissolution were/will be divided or credited as shown below: Particulars of the apportionment of the income	 profits or gains (or loss) of the business	 profession or vocation in the previous year or the period upto the date of dissolution between the partners who were entitled to share in such income	 profits or gains (or. loss). Name of Address Date of (1) (1) (2) Partner admitt Interest Salary Share ance of on capital or comm in the REMARKS partner or loans ission balance ship (if any) from of profits firm. (or loss) etc. 1 2 3 4 5 6 7 Note : (1) If the interest	 salary and/or. . loss divisible in column 6. (2) If any partner is entitled . . his share in column 6 the letter "P". (Signatures) (Address) Note : This application must be signed personally . of any such person who is deceased". From a reading of these provisions it is clear that in the case of an application for renewal it is incumbent on the part of the assessee to have divided the previous year 's profits. This conclusion appears to be obvious from Section 26(A) read with Rules 2	 3	 6 and the forms set out earlier. The contention ' of Mr. Sharma	 the learned counsel for the assessee	 that if the relevant provisions are interpreted in the manner that we have done it leads to hardship to the assessee	 is not relevant in view of the plain language of the provisions. Our conclusion in this regard receives support from the decision of Madras High Court in Surajmall vs Commissioner of	 L63lSuP Cl/73 82 Income tax	 Madras(1)	 and that of the Allahabad High Court in Ganesh Lal Laxmi Narain vs Commissioner of Income tax	 U.P.(2). In Khanjan Lal Sewak Ram vs Commissioner of Income tax	 U.P.(3) this Court had ruled that para 3 of Rule 6 (supra) is mandatory. We see no merit in this appeal. It is dismissed with costs. V.P.S. Appeal dismissed.

Summary:
The assessee firm applied for renewal of its registration under s.26A	 Income Tax Act	 1922	 in May 1958	 stating that the income of the previous year	 which ended on March 31	 1958	 had been divided among the partners. The Department Tribunal and the High Court did not believe that the previous year 's income had been divided and rejected the application. Dismissing the appeal to this Court	 HELD : From a reading of the section and rules 2	 3 and 6 of the In	come tax Rules and the forms prescribed	 it is clear that in the case of an application for renewal	 it is incumbent on the part of the assessee to have divided the previous year 's profits before the application for renewal is made. The fact that the interpretation may cause hardship to the assessee is irrelevant when the language is plain. [81 G] Surajmal vs Commissioner of Income tax	 Madras	 43 I.T.R. 491 and Ganesh Lal Laxmi Narain vs Commissioner of Income Tax	 U.P. 	 approved. Khanjan Lal Sewak Ram vs Commissioner of Income tax	 U.P.	 	 referred to.