1. The question referred to this court under Section 66(1) of the Income-tax Act ran;
'Whether the firm can be registered under Section 26-A of the Indian Income-tax Act for the assessment year 1949-50.'
The partnership which constituted the assesses firm was evidenced by the deed dated 20-8-1945. That deed provided that Raghavendra Suvarna should manage the affairs of the partnership. Nagamma was one of the six partners. She died on 1-1-1948.
2. The firm was registered under Section 26-A and the last of the renewals of registration was for the assessment year 1948-49. On 9-9-1949 the firm applied for registration for the assessment, year 1949-50. The corresponding account year of the assessee had ended on 30-6-1948. By then Nagamma was dead. The application was signed by the five surviving partners including Raghavendra Suvarna, and he signed over again for and on behalf of Nagamma. The Departmental authorities refused registration on the ground, that the application did not conform strictly to the statutory rules governing the registration under Section 26-A. The Tribunal upheld that view.
3. The deed of partnership dated 20-8-1945 provided that the partnership should Continue for a period of 20 years despite the death or disability of any of the six partners. The deed recited that the executants of that document should mean and include their heirs, executors and administrators. There was however no specific provision for bringing into the partnership the legal representatives of a deceased partner. The four minor children of Nagamma were her heirs-at-law when she died on 1-1-1948. There was no deed to evidence that these minors were admitted to the benefits of the partnership, which continued despite the death or Nagamma. The share of the profits which Nagammal would have been entitled to had she lived upto the end of the account year, was credited that year in the books of the assessee firm to the minor children of Nagamma.
4. It should be taken as well settled now that, before an assessee can claim the statutory right of registration under Section 26-A of the Act, there must be a strict compliance with the provisions of that section and the statutory rules. The Tribunal was right in the view it took, that the application dated 9-9-1949 did not satisfy these requirements. It was true that the five surviving partners signed the application but Raghavendra could not validly represent the deceased Nagamma.
5. The learned counsel for the assessee urged that the Income-tax Officer could have granted registration upto 1-1-1948, the date on which Nagamma died. The assessee firm with its five surviving partners could have applied for registration upto 1-1-1948; but it did not. Alternatively, It could have admitted the minors, the legal representatives of Nagamma, to the benefits of the partnership and could have applied for registration on that basis. That was not done either. The application it actually preferred on 9-9-1949 was rightly refused. Despite that, it may be open to the Government to grant relief to the assessee firm at least ex gratia, if the assessee acted in good faith, but misconceived the scope of the statutory conditions to be complied with before claiming the statutory right under Section 26-A of the Act. We can only answer the question referred to us, and our answer in the circumstances of the case must be, in the negative and against the assessee. We direct however that each party to this reference shall bear his costs. Counsel's fee Rs. 250.