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imperial Automobiles Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 28 of 1967 (Reference No. 5 of 1967)
Judge
Reported in[1973]87ITR695(Mad)
ActsIncome Tax Act, 1961 - Sections 184
Appellantimperial Automobiles
RespondentCommissioner of Income-tax
Appellant AdvocateS. Narayanaswami and ;T.V. Ramanathan, Advs.
Respondent AdvocateV. Balasubramanyan and ;J. Jayaraman, Advs.
Excerpt:
- - after referring to the inconsistency in the dates of execution as well as the date of the stamp papers, it proceeded to hold that the partnership is invalid as the execution of the document could not have preceded the purchase of the stamp papers on which the document has been written......that the partnership has been formed with effect from october 1, 1961, and produced the relevant document of partnership before the income-tax officer. but, it was found that though the document is purported to have been executed on october 1, 1961, the stamp papers on which the document has been written bore the date october 20, 1961. when this discrepancy was noted, a rectification deed (styled as a codicil) dated january 19, 1965, was executed by the partners to the following effect:' whereas it has now been brought to our notice that we have attested the partnership deed under date october 1, 1961, while the stamp paper for the partnership deed was purchased on october 20, 1961, it has become necessary to clarify the error in verbis as under: (1) the date october 1, 1961, wherever.....
Judgment:

Ramanujam, J.

1. The quest-ion referred to us for our decision by the Income-tax Appellate Tribunal under Section 256(1) of the Income-tax Act, 1961, is as follows ;

' Whether the refusal to grant registration to the assessee-firm on the basis of the document dated October 1, 1961, was justified ?'

2. The assessee, claiming to be a partnership firm, applied for registration under Section 184 of the Act and claimed that the partnership has been formed with effect from October 1, 1961, and produced the relevant document of partnership before the Income-tax Officer. But, it was found that though the document is purported to have been executed on October 1, 1961, the stamp papers on which the document has been written bore the date October 20, 1961. When this discrepancy was noted, a rectification deed (styled as a codicil) dated January 19, 1965, was executed by the partners to the following effect:

' Whereas it has now been brought to our notice that we have attested the partnership deed under date October 1, 1961, while the stamp paper for the partnership deed was purchased on October 20, 1961, it has become necessary to clarify the error in verbis as under:

(1) The date October 1, 1961, wherever it occurs in the partnership deed, shall stand corrected as October 20, 1961.

(2) The partnership shall be deemed to have come into force onOctober 1, 1961.

3. The above rectification deed was also produced before the Income-tax Officer and it was urged on behalf of the assessee that the date October 1, 1961, mentioned in the document is a mistake for October 20, 1961, and that actually the document had been executed only on October 20, 1961, though the partnership was intended to come into force on October 1, 1961.

4. The Income-tax Officer took serious note of the fact that the document is purported to have been written on October 1, 1961, on the stamp papers purchased on October 20, 1961, and held, from the inconsistency in the dates, that the partnership was ab initio void. The Income-tax Officer also took the view that the partnership could not have been genuine having regard to some other circumstances also. In that view the Income-tax Officer refused to register the firm for the purposes of the Income-tax Act. There was an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner also held that the document dated October 1, 1961, written on the stamp papers bearing date October 20, 1961, was ab initio void and that as there is no valid partnership deed in writing, the registration has rightly been refused by the Income-tax Officer. He, however, did not go into the question as to whether a partnership was genuinely constituted or not. On appeal, the Appellate Tribunal also took the same view. The Appellate Tribunal, without going into the question as to whether there was a genuine partnership constituted as contended by the assessee as per the partnership deed, proceeded to consider whether there was a valid partnership deed. After referring to the inconsistency in the dates of execution as well as the date of the stamp papers, it proceeded to hold that the partnership is invalid as the execution of the document could not have preceded the purchase of the stamp papers on which the document has been written. It specifically stated in more than one place that the question of genuineness or otherwise of the partnership is not relevant and that if the document of partnership is invalid the registration of the partnership could be rightly rejected.

5. The question is whether the above view taken by the Tribunal is legally acceptable. It may be that the difference in dates may lead to a suspicion that there was no genuine partnership and that the parties wanted to make it appear that by this document there has been a genuine partnership while there was none. Inconsistency in the dates may be relevant for the purpose of finding out the genuineness or otherwise of the partnership. But, if the partnership is genuine and the inconsistency in the dates is due to a mistake as contended by the assessee, the document itself cannot be said to be invalid for that reason. It may be that though the document is purported to have been written on October 1, 1961, it will become effective only from October 20, 1961; when it was executed by the parties after the document has been written on the stamp papers. The Tribunal, therefore, is not right in holding that the document itself is invalid for the reason that the date of the document precedes the purchase of the stamp papers. As already stated this question may be relevant for finding out the genuineness or otherwise of the partnership and this question has not been touched by the Tribunal on the view that the document itself is invalid. The Tribunal also did not consider that the rectification deed dated January 19, 1965, could cure the defect in the document dated October 1, 1961. In our view, the Tribunal should have gone into the question as to whether the partnership was genuine and whether the partnership deed produced evidenced such a genuine partnership. Its disposal of the appeal on the ground that the partnership deed as such is invalid cannot be accepted. We have to, therefore, answer the reference technically in favour of the assessee and against the revenue. The result is that the Tribunal has to reconsider the matter afresh and dispose of the same after giving a finding on the question as to the genuineness of the partnership and considering the document in the light of its said finding. No costs.


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