(1) The Income-tax Appellate Tribunal, Bombay, has referred the following question to this Court under S. 66 (1) of the Indian Income-tax Act, 1922 (Act XI of 1922), for decision.
'Whether, on the facts and in the circumstances of the case, the application under section 26-A of the Income-tax Act was filed out of time.'
(2) The relevant facts are correctly stated in the statement of the case drawn up by the Tribunal and are beyond dispute. The most important data for deciding the present case consists of various relevant facts and dates as follows:
(1) 5-11-1954 - The firm of assessee namely Shri Jayalakshmi Rice and Oil Mill Contractors Co., Angalur was constituted i.e., came into existence.
(2) 4-5-1955 - The date within which application should be filed by the assessee as an unregistered firm under Rule 2 (a) i.e., within six months of the constitution of the firm.
(3) 14-10-1955 - The assessee filed the application before Income-tax Officer for registration of the partnership under the Income-tax Act.
(4) 20-10-1955 - The assessee filed before the Registrar of Firms a statement under S. 48 of the Partnership Act (Act No. IX of 1932). The Income-tax Officer, in his order dated 23-3-1961 on the application, for certain reasons, concluded that the application, for registration was sent to the Registrar only on 1-11-1955. That conclusion is wrong. For, the assessee filed a statement (certificate) from the Registrar of Partnerships that the statement of the assessee under S. 58 reached him on 20-10-1955 which is the correct date.
(5) 26-10-1955 - The firm closed its books for profit and loss. This was the last date of the pervious year for the purpose or Rule 2.
(6) 2-11-1955 - The Registrar of firms filed the statement of the assessee and made entries in the register of firms.
(7) 23-3-1961 - The Income-tax Officer passed an order refusing to register the application for various reasons, one of which was that the application was not made in time.
(8) 26-6-1961 - The Appellate Assistant Commissioner of Income-tax, Vijayawada dismissed appeal I.T. No. 33/61-62 filed by the assessee.
(9) 12-3-1962 - The Income-tax Appellate Tribunal dismissed Appeal I.T. No. 4598 of 1961-62 filed by the assessee.
(3) Rule 2 lays down the time limit for filing application for registration under section 26-A of the Act. Section 26-A runs as follows:
'(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 purpose of this Act
(2) The application shall be made by such person or persons and at such times and shall 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.'
(4) A contention was raised before the learned Tribunal that the assessee was entitled to the benefit laid down in Rule 2 (b). The Tribunal rejected that contention. In its statement of the case, the learned Tribunal has stated the view which it took regarding that contention as follows:-
'The contention on behalf of the assesse firm was that since it had made its application for registration under the Indian Partnership Act on 20-10-1955, which was before the end of the 'previous year' the time limit (b) that is, 'before the end of previous year' and accordingly the application was within time. The Tribunal repelled this contention and held 'the limitation is undoubtedly to be considered with reference to the application under section 26-A. If, therefore, the extended limitation as given in Rule 2(b) is to be available, the condition that the firm is registered with the Registrar must be fulfilled when the application under S. 26-A is made. If limitation has already expired, can limitation be extended by reason of a subsequent event? We think not. It was held that the time limit applicable was that laid down in Rule 2 (a), which was within a period of six months of the constitution of the firm' i.e. six months from 5-11-1954 and hence the application which had been filed on 14-10-1955 was out of time.'
(5) Before us also, the learned Advocate for the assessee has raised the same contentions. For convenience, the contention can be split into two contentions as urged by him.
(1) That the effective date of registration of the firm under the Partnership Act is 20-10-1955.
(2) That the application to the Income-tax Officer is governed by Rule 2 (b) and was in time as the assessee presented it before 26-10-1955. The fact that it was presented before 20-10-1955 i.e., the date on which the firm became a registered firm under the Partnership Act was not material.
(6) Contention No. 1: - Sections 58 and 59 of the Partnership Act run as follows:
'S. 58 (1) 'Application of registration.' The registration of a firm 'may be effected' at any time 'by', sending by post or 'delivering to the Registrar' of the area in which any place of business of the firm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee stating. .....
S. 59. 'Registration': - When the Registrar is satisfied that the provisions of Section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement.'
(7) It is beyond doubt or dispute that the statement which was presented to the Registrar on 20-10-1955 complied with the requirements of S. 58 of the Partnership Act and that the Registrar duly made an entry in the Register of Firms under section 59 of that Act.
(8) The learned Advocate for the assessee relies on the words in S. 58 which we have underlined, (herein ' ' ). On the other hand, Shri C. Kondaiah the learned Advocate for the Department, contends that the registration of the firm took place only when the Registrar made an entry in the Register of Firms under section 59 and filed the statement i.e., on 2-11-1955.
(9) The crucial question is whether the registration took effect and came into existence, thereby making the firm a registered firm, by the mere act of delivering the prescribed statement to the Registrar under S. 58 and only by the act of the Registrar making entry in the Register of Firms and filing the statement.
(10) The words of the statue in S. 58 of the Partnership Act are express and clear that registration may be effected by delivering to the Registrar a statement. On the contrary section 59 mentions that the Registrar shall make an entry of the statement in the Register of Firms but does not say that, by such entry, registration is effected. Thus, the wording of the body of section 59 is consonance with the wording of the body of section 58 and the two sections indicate a scheme whereby the act of the party by way of presentation of statement under S. 58 makes effective registration whereas the action of the Registrar is Register of Firms and filing the statement regarding a firm which had already become effectively registered.
(11) The marginal title in section 58 reads as if the delivery of statement to the Registrar under S. 58 is an application for registration and the marginal title to S. 59 refers to the process involved in that section as registration. Thus, the marginal titles of sections 58 and 59 support the contention of the Department whereas the bodies of sections 58 and 59 support the contention of the learned Advocate for the assessee. When there is such a clash, beyond doubt, the contents of the body of sections will prevail over the contents of marginal titles which aim at giving a gist by using compressed language of the nature of catch-words.
(12) In Maxwell on 'The Interpretation of Statutes' (Eleventh Edition, 1962), it has been stated as follows: (at pages 42-43)
'Nevertheless, it has been said they (marginal notes) are not to be taken as parts of the statute. I do not think I am entitled to have regard to the (marginal note) in interpreting a statute, and I disregard it on that ground.
But, as regards marginal notes, this rule has not always been observed. For the purpose of interpretation a marginal note was used - saying 'some help will be derived from the side-note (though of course it is not part of the statute), which shows that the section is dealing with (certain matters).'
(13) In 'Partnership law in India and Pakistan' by K.M. Ghose (2nd Edition, 1955), the following statement is extracted from the report of the Special Committee which had been appointed by the Government of India to examine the provisions of the Bill before it became passed by the General Legislature as the Partnership Act; ( at page 536)
'Clause 58 (corresponding to S. 59) - In connection with this clause and with the succeeding clauses two points should be noted:
(1) The Registrar is a mere recording officer and the entries he makes in the Register will contain only the facts, or alleged facts, of which he is given notice. So long as any statement or notice is formally correct he has no discretion but to record them in the Register of Firms.
(2) In addition to making the necessary entries in the Register of Firms, he is required to file the original of every document submitted to him. The original statement and all subsequent statements and notices will be filled together. So that all original papers relating to any firm will be conveniently found together in one file.
Clause 59 (corresponding to S. 60) relates to the recording of alterations in the firm name and the principal place of business of the firm, and it requires the same degree of formility as is required for the original statement under clause 58. Clause 60 (corresponding of section 61) relates to the noting in the Register of the closing and opening of branches. This is a less important matter and the clause permits of the notice being sent by any partner.'
In interpreting a section of an Act, only the wording of that section has to be taken into account. Still, the report of the Special Committee on corresponding clause of the Bill can be taken into account, when it throws light on the subject.
(14) The members of the Special Committee included eminent jurists and were:-
Chairman:- The Honourable Sir B.L. Mitter, Law Member of the Council of the Governor General.
Members:- (1) Sir. D.G. Mulla.
(2) Mr. Alladi Krishanswami Ayyar Advocate-General, Madras
(3) Mr. Arthur Eggar, Government Advocate, Rangoon.
(15) Shri C. Kondaiah, the learned Advocate for the Department, relied on the wording of sections 60, 61 and 68 for his contention that the act of the Registrar by recording and filing the statement amounted to giving legal status to the concerned firm as a registered firm and was not a mere clerical act.
(16) We have already extracted above, the portions in the report of the Special Committee relating to clauses 59 and 60 which correspond to sections 60 and 61. Section 68 of the Partnership Act runs as follows:
'(1) Any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, he conclusive proof of any fact therein stated.
(2) A certified copy of any entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein.'
Section 68(2) only lays down a rule of evidence based on the fact that the Registrar, as a responsible office of the Government entrusted with the duty of maintaining a true and faithful record as a recording officer, would accordingly make record in the register of firms which was a Government record. The provision in Section 68(1) that a person is bound by the contents of the statement which he delivers to the Registrar is also a rule of evidence. This does not alter the nature of the act involved in the Registrar acting under sections 59 and 60 etc.
(17) Thus Rule 21 of the Civil Rules of Practice run as follows:-
'All plaints. . . . . . . may be presented to or filed in Court by delivering the same personally to the chief ministerial officer of the Court at any time during office hours. The said officer shall at once endorse on the document the date of presentation and if proceedings are thereby instituted, shall insert the serial number.'
According to rules, the plaints so presented are entered in a Register of suits maintained for the purpose. Extract from the suits Register is also admissible in evidence to prove the various details mentioned in that Register in several columns which entries are made from the plaint etc. The entries in the Shri Register are generally made by a clerk who maintains it on behalf of the Presiding Officer of the Court who is the Head of the Office as a mere recording officer. Institution of suit is effected by filing (presentation) of the plaint assuming that it is in the prescribed form and complies with all the requirements of law and rules, so that it is entitled to be received and registered as a suit. Subsequent to the presentation of this plaint, the Presiding Officer of the Court passes an order of admission and the Suits Clerk makes a record in the Register of Suits by making entries in various columns of the details shown in the plaint. Thus, he registers the suit in the Court. When it becomes necessary at any stage to determine whether the suit is in time and whether the period of limitation has expired, it is the day of presentation which matters, not the day on which the Presiding Officer passes an order of admission or the day on which the Suits clerk makes entry in the Register.
(18) Section 58 of the Partnership Act provides that the registration of the firm is effected by delivery of statement to the Registrar.
(19) In Lindley on Partnership (Twelfth Edition), it is stated as follows: (at page 812)
'When registration is complete:
It is apprehended that registration is complete as soon as the prescribed statement has reached the registrar; and that the filing of the statement and issue of the certificate are ministerial acts the omission of which would not deprive a limited partnership of the benefit of the Act.'
(20) In Corpus Juris Secundum (Volume VIII) it is stated in para 459 as follows: (at page 1014)
'It is sufficient if the parties actually file the papers with the specified officer, although he fails to record them.'
(21) In the Report of the Special Committee given in Ghosh's Book of Partnership Law in India and Pakistan, it has been stated in para. 6 as follows: (at page 507)
'These remarks have encouraged us to depart from the precedent of the sale of Goods Bills, where the English Act was modified in a few particulars only, and to use the Partnership Act, 1890, with some degree of freedom. Nevertheless, the Bill does not alter in any substantial way the English Law of Partnership or the Indian Law of Partnership, which is based thereon. The main principles are the same, and likewise all important details. The deviations in principle it does show are on minor points, and have been introduced in order to adopt the law to Indian conditions or to supplement it in places where it is incomplete, or are supported by the views of authoritative commentators.'
(22) In the Limited Partnerships Act, 1907, Section 8 corresponding to section 58 of the Indian Partnership Act and section 13 corresponding to section 59 of the Indian Partnership Act run as follows:
'Section 8. Manner and Particulars of registration:
The registration of a limited partnership shall be effected by sending by post or delivering to the registrar at the registered office .. ... a statement signed by the partners containing the following particulars:
Section 13, to file a statement and issue certificate of registration:- On receiving any statement made in pursuance of this Act the registrar shall cause the same to be filed, and he shall send by post to the firm from whom such statement shall have been received a certificate of the registration thereof.'
It will be observed that section 8 of the English Act is substantially similar to section 58 of the Indian Act especially in using the words 'shall be effected by sending by post or delivering .. .. .. and that section 13 of the English Act is substantially similar to section 59 of the Indian Act of 1907 (7 Edw. 7 C. 24), it is stated as follows:-
'Firm' 'firm name', and 'business' have the same meaning as in the Partnership Act, 1890.' Thus, the comment of Lindley extracted above, which is based on the English Law, is applicable to the corresponding Indian Law which is stated in section 58 and section 59 of the Indian Partnership Act.
(23) In (FIRM) Ram Prasad Thakur Prasad v. (Firm) Kamta Prasad Sita Ram AIR 1935 All 898, the relevant facts are as follows: The plaintiff, purporting to be a firm, entered a plaint on 27-10-1933, which was admitted and registered on 28-11-1933. On 23-3-1934, he made an application to amend the plaint after having obtained a certificate to the effect that the firm had been registered in accordance with section 59 of the Act. In the first place, it had been argued that this statement of the Court was incorrect, as the plaintiff never admitted that the firm had not been registered when the suit was filed. It has been stated thus in the Judgment: (at page 899)
'.. .. .. It has not been proved by an affidavit that the plaintiff made an application for registration on 25th October 1933, i.e., two days before the plaint was filed and it has been pointed out that under Section 58 of the Act 'The registration of a firm may be effected at any time by sending by post or delivering to the Registrar .. .. .. a statement in the prescribed form .. .. '
This had been done and, therefore, it is argued the registration had been effected and the suit was good.'
The learned Judge made reference to section 69 of the Act which runs as follows:-
'No suit to enforce a right arising from a contact or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm .. .. .. unless the firm is registered and the person suing is or has been shown in the Register of firms as a partner in the firm.'
The learned Judge held that it is necessary therefore, not only that the firm should be registered, but the person suing must be shown as a partner in the firm and it is admitted that on the date when the plaint was filed the second part of this condition had not been carried out.'
The learned Judge did not accept the contention made on behalf of the plaintiff. He held that registration amounts to more than what is said in S. 58 as the Registrar must be satisfied that the provisions of section 58 had been duly complied with and must record an entry in Register of Firms. The question s to whether, when all the provisions were complied with, and the statement contained no material defects, the act of the Registrar under section 59 amounted to a mere clerical act of recording or discretionary act was not raised, considered or decided in that case. The learned Judge did not refer to the corresponding English Law or the Commentary of Lindley which we have extracted earlier in this judgment. The question of the requirement of section 69 of the Indian Partnership Act that the person suing should be shown in the Register of Firms as a partner in the firm does not arise in the present case. Here, we are concerned with the wording of section 26-A of the Income-tax Act and Rule 2.
(24) In Bank of Koothathukulam v. Thomas, AIR 1955 Trav-Co. 155, the relevant facts were as follows: The plaintiff-Bank was a firm. It filed a suit against the defendants on the ground that the first defendant had issued a cheque on Palai Central Bank in favour of the second defendant. The second defendant endorsed it in favour of the plaintiff-Bank and received payment thereon from the Bank Koothattukulam. Subsequently, the Palai Central Bank returned the cheque dishonoured to the plaintiff on the ground that the First defendant had counter-manded payment. The Managing Proprietor of the plaintiff-firm sent a statement prescribed under section 57(1), Travancore Partnership Act, which corresponded to Section 58 of the Indian Partnership Act, with the prescribed fee on 8-11-1947 and they were received by the Registrar of Joint Stock Companies on 12-11-1947. The plaintiff filed the suit on 10-11-1947. The question arose as to whether the suit was properly instituted by complying with the requirements of section 68(2) of the Travancore Partnership Act which substantially corresponded to section 69(2) of the Indian Partnership Act. The learned Judges extracted the relevant portion from the judgment in AIR 1935 All 898 with apparent approval and they held as follows: (at p. 157)
'Reading Sections 57 and 58 together we are inclined to take the view that a firm cannot be said to be registered when the statement prescribed by section 57(1) and the required fee are sent to the Registrar of Joint Stock Companies and that the registration of the firm is effected only when the entry of the statement is recorded in the Registrar of Firms and the statement is filed by the Registrar as provided in section 58.'
They referred to the passage in Lindley on Partnership, Edition 10, page 922 (Edition 12, page 812). They did not expressly disagree with that statement but observed as follows: (at page 157)
'Even if it is possible to accept this view, in the present case the statement sent by the Managing Proprietor of the firm reached the Registrar only on 12-11-1947, i.e., two days after the suit was filed. It cannot, therefore, be held that the firm was registered before the suit was instituted.'
Though the learned Judges did not specifically disapprove the view of Lindley, they expressed a view which differed from the view of Lindley and amounted to an implied disagreement with the view of Lindley.
The learned Judges also agreed with the view of Kendall, J. in AIR 1935 All 898, that the requirement of S. 69(2) i.e. persons suing are or have been shown in the Register of Firms as partners in the firm was not fulfilled.
(25) In view of what we have already discussed and stated in this judgment, we respectfully disagree with the view of the learned Judges in AIR 1935 All 898 and AIR 1955 Tray Co 155, respectfully agree with the view of Lindley in the passage already extracted by us and hold that registration became effective on 20-10-1955, the date on which the statement was delivered to the Registrar. We accept the first contention on behalf of the assessee.
Contention No. 2:
(26) At the time when the assessee presented the application under S. 26-A i.e., 14-10-1955 the partnership was an unregistered one not having been registered under the Partnership Act. Therefore, on that particular date, Rule 2 (a) applied. The relevant portion of Rule 2 is as under -
'Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of Section 26-A of the Indian Income -tax Act, 1922 registered with the Income-tax Officer, the particulars contained in the said instrument on application made in this behalf.
Such application shall .. .. be made .. (a) where the firm is not registered under the Indian Partnership Act, 1932 (IX of 1932) or where the deed of partnership is not registered under the Indian Registration Act, 1908 (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 Indian Partnership Act, 1932 (IX of 1932), or where the deed of partnership is registered under the Indian Registration Act, 1908 (XVI of 1908), before the end of the previous year of the firm.'
According to Rule 2(a) the application would be in time only if it had been filed within six month's period ending with 4-5-1955. So, as an unregistered application when it was presented on 14-10-1955, it was barred by time. Under the law, the assessee had a right to get it registered under the Indian Partnership Act on any day by delivering statement to the Registrar and, after so delivering such statement, present his application to the Income-tax Act on any date upto 26-10-1955. In this case, if the assessee had presented his application before 4-5-1955, his application would have been in time. The effect of the view taken by the Department and the Tribunal is that, when the assessee presented the application suffered on the one hand from being too late as relating to an unregistered firm under Rule 2(a) and, on the other hand, from being not late enough for its being treated as a registered partnership to be in time by application of Rule 2(b). If the Income-tax Officer had passed an order promptly on the application before 26-10-1955 treating it as barred by limitation under Rule 2(a) on the ground that the partnership was unregistered at the time of presentation of the application, it would still have been open to the assessee to present another identical application before 26-10-1955 and claim benefit as filing an application within time. It so happened that order was passed by the Income-tax Officer on this application long after 26-10-1955 i.e. on 23-3-1961. By that time, the period available for the assessee up to 26-10-1955 to file another application claiming benefit as registered partnership had expired. But, his application dated 14-10-1955 was pending with the Income-tax Officer even after the partnership became registered on 20-10-1955. At order on the application, he was dealing with a partnership which was a registered partnership though on the date on which the application was filed before him (14-10-1955) it had been an unregistered partnership. This change substantial effect on the period of limitation and had a decisive effect on the question whether the application could be allowed or not, resulted by operation of law under statutory rule 2 (b), as distinct from rule 2(a), following from the assessee exercising a statutory right given to him under S. 58 of the Indian Partnership Act to convert an unregistered partnership into a registered partnership by an act of his volition.
(27) The question is whether the period of limitation for this application automatically became extended when it was pending before the Income-tax Officer and had not disposed of by him.
(28) Even when the application dated 14-10-1955 was pending before the Income-tax Officer as regards a partnership which was unregistered, it was also possible for the assessee to file another application during the period 20-10-1955 to 26-10-1955 under S. 26-A of the Income-tax Act read with Rule 2 (b). If he had so presented, the Income-tax Officer would have had to allow that application when he dismissed the earlier application dated 14-10-1955 as coming under Rule 2(a). The question is whether the assessee was bound to put in another application under Rule 2(b) during the above period. It was open to him to bring to the notice of the Income-tax Officer during that period that the firm had become a registered firm instead of filing a fresh application which was self-contained regarding all details. But, even if he did not bring it to the notice of the Income-tax Officer during that period, he could bring it to his notice at any time before the Income-tax Officer passed an order on the application
(29) The Officers of the Income-tax Department and the Tribunal rejected the application of the assessee on two main grounds: (1) that the assessee was an unregistered firm when the application was filed; and (2) that registration was a condition precedent for presentation of the application under Rule 2 (b).
(30) Rule 2 does not prescribe one particular from for a firm which was registered under the Partnership Act and a different form for a firm which was not registered under the Partnership Act. The same application could have been presented in respect of the firm whether it was registered under the partnership Act or not. The rules do not specifically mention that it should be stated in the application under Section 26-A that the firm was registered under the partnership Act.
(31) In I.T. Commr., Bombay City v. Filmistan Ltd., : 42ITR163(SC) the relevant facts wee as follows; The assessee was allowed to pay amount of income-tax in instalments. He defaulted payment of the last instalment of Rs. 3000 which was payable on or before 20-3-1955. On account of this default, the Income-tax Officer passed an order dated 31-3-1955 under Section 46(1) of the Act imposing a penalty of Rs. 3000. On 20-4-1955, the assessee filed an appeal to the Appellate Assistant Commissioner. Subsequently, on 16-5-1955, he paid the last instalment which was payable on or before 20-3-1955. The Income-tax Officer raised a preliminary objection. This was based on the proviso to Section 30 (1) which runs as follows:
'Provided that no appeal shall lie against an order sub-section (1) of Section 46 unless the tax has been paid.'
A contention was raised before their Lordships of the Supreme Court and they dealt with it as follows: (at page 1135).
'The controversy between the parties revolves round the words 'no appeal shall lie'. The contention which was raised before us was that these words mean that there is no right of appeal till tax is paid and therefore, if the tax has not been paid the memorandum of appeal cannot be filed and if filed it is merely a waste paper. In our opinion the meaning of the words 'no appeal shall lie' in the proviso is not that no memorandum of appeal can be presented. All that it means is that the appeal will not be held to be properly filed until the tax has been paid. If for, instance, the memorandum of appeal is filed on the 20th day i.e., 10 days before the period of limitation expires and the tax is paid within the rest of the 10 days the appeal will be a proper appeal; it will be within time and no question of limitation will arise but if the tax is paid after the period of limitation has expired it will betaken to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation.'
It is obvious that in this passage, the word 'presented' is used as synonymous with the word 'filed' in that case, the amount of tax was paid after the period of thirty days provided for by Section 30(1) had expired. Therefore, their Lordships approved of the order of the Tribunal that the appeal should be taken to have been preferred before the Appellate Assistant Commissioner on 16-5-1955 i.e., after the expiration of the period of limitation and that it was for the Appellate Assistant Commissioner to decide whether it was a fit case for extension of time and for condonation of delay. In this case, such a question does not arise. The relevant data in the present case are substantially similar to the relevant date in the above case. Whereas in Section 30(1), the words used are 'no appeal shall lie' he words used in Rule 2 are 'such application shall be made'. In these two provisions, here is similarity in substance though difference in form and wording. In Sec. 30(1) active voice is used with the word 'appeal' as subject. In Rule 2, passive voice is used with 'application' as subject. An appeal or application lies when it can be presented or made or filed by a person that is, appellant or applicant. An appeal or application can be made by a person (appellant or applicant) only when it lies. An appeal which does not lie in law cannot be made in law. In Section 30(1), the requirement is 'unless the tax has been paid.' In this case, the provision in Rule 2 (b) is 'where the firm is registered under the Indian Partnership Act, 1932.' Their Lordships clearly indicated that, under the provision of Section 30(1), if the application had been filed i.e., presented first and if the tax had been paid later, it will be held to be properly filed only on the day on which the tax has been paid. In the same way, in this particular case, the application under Section 26-A of the Income-tax Act will be deemed to be properly made only on the date on which the partnership was registered under the Partnership Act i.e., on 20-10-1955. Section 30(2) of the Income-tax Act says that the 'appeal shall ordinarily be presented within thirty days of the payment of the tax .. .. .. but the appellate Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period.' In this case, the application has to be taken as properly made i.e., filed as an application by a firm registered under the partnership Act on 20-10-1955 which was well within the period limitation.
(32) In Bodh Raj v. Deputy Commr. , Jammu, AIR 1961 J and K 62 Gopala Krishnan Nair, J. Observed that, if a provision of the law of limitation was fairly susceptible of two constructions, the Court was not bound to adopt the one which was more harsh.
(33) In Sardani Ram Khetri v. Hind Iran Bank Ltd., , it was observed as followed: (at page 529)
'It must be remembered that law of limitation has to be strictly construed in favour of the right to proceed and unless a provision depriving a suitor or a litigant of his right to claim relief is clearly and unambiguously attracted the Courts in this country should not refuse to adjudicate upon the merits of the controversy on account of time bar.'
(34) To a similar effect is the decision in Makhanlal v. Pramathanath, : AIR1953Cal50 wherein it was observed as follows: (at page 52)
'.. ... the Court ought not to put such an interpretation upon a statute of limitation by implication and inference s may have a penalising effect unless the Court is forced to do so by the irresistible force of the language used. It is well settled that the Limitation Act, being an Act which takes away or restricts the right to take legal proceedings, must, where its language is ambiguous, be construed strictly i.e., in favour of the right to proceed.'
(35) We find as follows. We disagree with the finding of the Tribunal that the condition that the partnership be registered with the registrar must be already fulfilled at the time when the application was presented. We find that it is sufficient to meet the requirements of Rule 2 (b) if the partnership became registered under the Partnership Act even after the application was filed.
(36) In the result, we answer the question referred to us as follows:
'On the facts and in the circumstances of the case the application under S. 26-A of the Income-tax Act was filed in time and not out of time.'
In the circumstances of the case, we make no order as to costs. Advocate's fee Rs. 250.
(37) Reference answered.