The Judgment of the Court was delivered by
N.H Bhagwati, J.— This appeal from the judgment and order of the High Court, Saurashtra, dated 18th October, 1955 concerns the registration of two partnership firms under the provisions of the Saurashtra Income Tax Ordinance, 1949, corresponding to Section 26-A of the Indian Income Tax Act. Both the firms were named Patel & Co.
2. The firm with which we are concerned for Assessment Year 1949-50 was the larger firm of Patel & Co. constituted by a deed of partnership dated 6th February, 1948 and consisted of three partners (1) Patel & Co. (hereinafter called “the Smaller Patel & Co.)” (2) Sheth & Co., and (3) Maharshi Dayanand Maha Vidyalaya having shares of -/7/6/,-/7/6/ and -1-/respectively in the profit and loss of the partnership. This deed of partnership was signed by Arjun Kunverjee Patel, a partner of Patel & Co. (Smaller Patel & Co.), Jamnadas Bhanji Patel, a partner of Sheth & Co. and Nanji Kalidas Mehta, a trustee of Maharshi Dayanand Maha Vidyalaya. In the application for registration which was made to the Income Tax Officer for registration of this firm the same position obtained and the application was signed by these respective parties in the manner above described. This firm was registered by the ITO by his order dated 6th June, 1951 stating that the partners as were existing had applied for registration giving reasons why others could not sign and as the reasons given in their statements were genuine and the partnership was genuine, registration should be granted.
3. In regard to Assessment Year 1950-51, what was sought to be registered was the partnership firm of Patel & Co. which came into existence under the deed of partnership dated 12th July, 1949. This firm consisted of two Partners, Nanji Kalidas Mehta and Arjun Kunverjee Patel, the partners having -/15 and -/1/- shares respectively in the profit and loss of the partnership. The deed of partnership was signed by both these partners and the application for registration made to the Income Tax Officer was also signed by them. This firm was also registered by the Income Tax Officer by his order dated 6th June, 1951 on the very same grounds which were mentioned in regard to the firm which had been brought in existence by the deed dated 6th February, 1948.
4. The Commissioner of Income Tax, Bombay North, Kutch & Saurashtra cancelled both these registrations holding that the deeds of partnership were not signed by all the partners and the firms could not therefore be registered. The firm thereupon appealed to the Tribunal against the said order of the Commissioner and the Tribunal by its consolidated order dated 18th April, 1953 affirmed the order of the Commissioner cancelling the registration insofar as Assessment Year 1949-50 was concerned and reversed the order of the Commissioner cancelling the registration for Assessment Year 1950-51 and granted registration for the said assessment year commencing from 1-7-1949 and ending on the 31-12-1949. As regards the period of 1st January, 1949 to 30th June, 1949 registration was thus refused.
5. At the instance of the firm the Tribunal stated the case and raised and referred the following questions of law to the High Court under Section 108(1) of the Saurashtra Income Tax Ordinance, and under Section 66(1) of the Indian Income Tax Act for its decision namely:
“(1) Whether on the true interpretation of the Deed of Partnership dated 6-2-1948 the partners were:
(i) Smaller Patel & Co.
(ii) Sheth & Go.
(iii) Maharshi Dayanand Maha Vidyalaya
(i) Arjun Kunverjee Patel
(ii) Jamnadas Bhanji Patel
(iii) Nanji Kalidas Mehta.
(2) Whether the Firm Patel & Co., was entitled in law to be registered for the year 1949-50 under the Saurashtra Income Tax Ordinance and the Rules made thereunder.
(3) Whether the registration granted by the Appellate Tribunal for the year 1950-51 should be for the entire year of account, namely, 1949 or for the period from 1-7-1949 to 31-12-1949.”
6. The said reference was heard by the High Court and judgment was delivered on 18th October, 1955 whereby the High Court answered the first referred question by stating that Smaller Patel & Co., Sheth & Co. and Maharshi Dayanand Maha Vidyalaya were partners of the firm constituted by the deed of partnership dated 6th February, 1948, answered the second referred question in the affirmative and answered the third referred question by stating that the registration for 1950-51 should be for the entire year of account, namely, 1949. The Commissioner applied for a certificate for leave to appeal to this Court and the High Court of Saurashtra by its order dated 5th July, 1956 gave the requisite certificate under Section 66-A(2) of the Indian Income Tax Act. By the time this certificate came to be granted, our decision in Dulichand Lakshminarayan v. CIT, 1956 SCR 154 had been pronounced and the High Court therefore realised that its decision against which the application for certificate for leave had been filed could no longer be regarded as good law and granted the said certificate.
7. We are concerned in this with the registration of the firm for Assessment Years 1949-50 and 1950-51. As regards Assessment Year 1949-50 Shri Kolah had urged a preliminary objection in regard to the maintainability of the appeal. He has urged that there was no provision under the Saurashtra Income Tax Ordinance, 1949 under which any certificate for leave to appeal could be granted. It is true that the judgment of the High Court under appeal was pronounced on 18th October, 1955 that is long after the Constitution came into force. This however, could not avail of the appellant because the questions of law which were referred for the decision of the High Court were in the exercise of its advisory or consultative jurisdiction and the provisions of the Constitution in regard to the certificate for leave to appeal to this Court could not therefore in terms apply. Shri Rajagopala Sastri realised the force of this contention and fairly enough conceded that the appeal for Assessment Year 1949-50 could not be maintained. The appeal in so far as it concerned Assessment Year 1949-50 will therefore be dismissed.
8. In regard to Assessment Year 1950-51, the only grievance of the appellant was that the High Court had directed the registration of the firm for the entire year of account, namely, 1949. It was urged on behalf of the appellant that this registration should have been confined only to the period between 1-7-49 and 31-12-49. Shri Kolah on behalf of the respondent stated before us that he was not pressing for maintenance of the order made by the High Court in this behalf and was willing that the registration should be confined only to the period between 1-7-49 and 31-12-49. We are of the opinion that this is a fair attitude to take up as the deed of partnership of the firm came into existence only on 12th July, 1949 and under the terms thereof the partnership commenced with effect from 1-7-49. That being the position the appeal so far as the Assessment Year 1950-51 is concerned will be allowed and the direction given by the High Court will be modified in that the registration of the firm will be operative for the period between 1-7-49 and 31-12-49. The appeal will, therefore, be allowed partially to the extent mentioned above and the order of the High Court will be varied accordingly.
9. Under the circumstances of the case, both the parties having succeeded partially in the appeal, the proper order for costs will be that each party will bear and pay its own costs here as well as in the court below.