COMMISSIONER OF INCOME-TAX VS JAIN STEEL ROLLING MILLS
1991 P T D 107
[Punjab and Haryana High Court (India)]
Before Gokal Chand Mital and S.S. Sodhi, JJ
COMMISSIONER OF INCOME-TAX
versus
JAIN STEEL ROLLING MILLS
Income-tax Case No. 38 of 1980, decided on 15/11/1988.
Income-tax---
----Firm---Registration---Minor admitted to benefits of partnership---Direction in circular of Board of Revenue that registration need not be denied for lack of signature of guardian of minor admitted to benefits of partnership unless guardian refused to sign document---Circular binding on Income-tax authorities---Tribunal ordering registration because opportunity had not been given to guardian to sign partnership deed---Order of Tribunal is valid---Indian Income-tax Act, 1961, S.185---Central Board of Direct Taxes Circular No.210/13/74/I.TA.(II), dated 19-3-1976.
Certain minors were admitted to be benefits of a partnership. Application for registration was rejected on the ground that the deed of partnership was not signed by the guardian of the minors. The Tribunal allowed registration on the ground that by Circular CBDT No. 210/13/74/I.T.A.(II) dated 19-3-1976, the Central Board had issued directions that the assessee need not be denied registration for lack of signatures of the guardian unless such guardian refused to verify or sign the document if required to do so. On an application for reference under section 256(2):
Held, that in the Supreme Court judgments K.P. Varghese v. I.T.O. (1981) 131 ITR 597 and Ellerman Lines Ltd. v. C.I.T. (1971) 82 ITR 913, it was clearly laid down that such circulars were binding on the Department and, therefore, the Circular No. 210/13/74/ITA(II), dated 19-3-1976 should have been taken notice of and opportunity should have been granted to the guardian to sign the partnership deed on behalf of the minors. Since this procedure followed, the Income-tax Officer could not refuse registration. Therefore, question of law ;rose from the Tribunal's order.
Additional C.I.T. v. Uttam Kumar Pramod Kumar (1978) 115 ITR 796 (All.); C.I.T. v. Associate Industrial Distributors (1982) 138 ITR 304 (Cal.); Ellerman Lutes Ltd. v. C.I.T. (1971) 82 ITR 913 (S C); Srinivasa Stainless Steel and Moulding Works v. C.I.T. (1987) 167 ITR (A.P.) and Varghese (K.P.) v. I.T.O. (1981)131 TTR 597 (SC) ref.
Ashok Bhan (Ajay Mittal with him) for the Commissioner.
Nemo for the Assessee.
JUDGMENT
GOKAL CHAND MITAL, J.--The Revenue desires this Court to issue mandamus for calling for a statement of the case on the following question:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the registration benefits cannot be denied because of lack of signature of the guardian, unless, such guardian refused to verify or sign the documents?"
The facts of the case are as follows:
Certain minors were admitted to the benefits of the partnership but the partnership deed was not signed by the guardian of the minors. The application for registration of the partnership was rejected on this ground. However, on appeal to the Tribunal, registration was ordered on the reasoning that by CBDT Circular No. 210/13/74/ITA(II) dated 19-3-1976, the Central Board had issued directions that the assessee need not be denied registration for lack of signatures of the guardian unless such guardian refused to verify or sign the document if required to do so. Since opportunity had not been granted to the guardian, order for registration was made.
Before us, an argument has been raised on behalf of the Revenue for issuing mandamus on the basis of a Full Bench decision of the Allahabad High Court in Addl. CIT v. Uttam Kumar Pramod Kumar (1978) 115 ITR 796, whereas counsel for the assessee has strongly relied upon the circular, which is binding on the Revenue in view of the Supreme Court decisions in K.P. Varghese v. ITO (1981) 131 TTR 597, Eferman Lines Ltd. v. CIT (1971) 82 ITR 913 and Commr. of Agri. I.T. v. Perunad Plantations Ltd. (1965) 56 ITR 198 (S C) in which it has been held that such circulars are binding on the Department. It is also argued that the dictum of the Allahabad High Court in Uttam Kumar's case (1978) 115 ITR 796 (All.) was dissented from by the Andhra Pradesh and Calcutta High Courts in Srinivasa Stainless Steel and Moulding Works v. CIT (1987) 167 ITR 1 and CIT v. Associate Industrial Distributors (1982) 138 ITR 304.
We have 'gone through the three Supreme Court decisions referred to above and find that it is clearly laid down that such circulars are binding on the Department and once that is so, the circular noticed above should have been taken notice of and opportunity should have been granted to the guardian. to sign the partnership deed on behalf of the minors. Since this procedure was not followed, the Income-tax Officer could not refuse registration.
In the result, we are of the opinion that no question of law arises and the application of the Revenue is dismissed with no order as to costs.
Z.S.//730/TApplication dismissed.