SHERE PUNJAB SILK STORES, DELHI versus COMMISSIONER OF INCOME-TAX, DELHI

Citation: [1973] 3 S.C.R. 76 · Decided: 11-12-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

16 
SHERE PUNJAB SILK STORES, DELHI 
v. 
COMMISSIONER OF INCOME· TAX, DELHI 
December 11, 1972 
(K. S. HEGDE AND P. JAGANMOHAN REDDY, JJ.] 
A 
Incmm Tax Act (11 of 1922) s. 26 A and Income Tax R11les, 1922 
B 
rr. 2, 3 and 6-A.pplication for renewal of registration-Division of pi .... 
rious year's profits-:-If incu111be11t before application is 1nade. 
The assessee firm applied for renewal of its registration under s.26.A, 
Income Tax Act, 1922, in May 1958, stating that the income of the pre. 
viouo year, which ended on March 31, 1958, had been divided amon& 
the partners. The Department Tribunal and the High Court did not 
beline that the previous year's income had been divided and rejected the 
C 
application. 
Dismissing the appeal to this Court, 
HELD : From a reading of the section and rules 2, 3 and 6 of the In· 
com_e tax Rules and the forms prescribed, it is clear that in the case of an 
. application for renewal, it is incumbent on the part of the asse:ssee to have 
di•"idcd the previous year's profits before the application for renewal is 
made. The fact that the interpretation may cause hardship to the assessee 
D 
. is irrelevant when the language is plain. [81-0] 
S•rajmalJ v. Commissioner of Jncome~tax, Madras, 43 I.T.R. 491 and 
Gant1h Lal Laxmi Narain v. Commissioner of Income Tax, U.P. 68 
l.T.R .. 696, approved. 
Khanjan Lal Sewak Rani V, Co1nniissioner of J11co111c-ra.r. 
r_:.P .. 
s.~ 
J.T.R. 175, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1690 of 
1969. 
I 
Appeal by special leave from the judgment and order dated 
July 15, 1968 of the Delhi High Court at New Delhi in Income-
iax Reference No. 44 of 1964. 
G. C. Sharma, R. Chawla, S. R. Gupta, R. P. Soni and K. B. 
Rohtagi for the appellant. 
F. S. Nariman, Addi. Solicitor-General of India, A. N. Kirpal, 
S. P. Nayar and R. N. Sachthey tor the respondent. 
The Judgment of the Court was delivered by 
HEGDE, J. This is an appeal by special leave. The appellant 
is the assessee. In this case we are concerned with his assessment 
for the assessment year 1958-59. The relevant previous year 
ended on March 31, 1958. The assessee firm applied for renewal 
of.ill! registration under section 26(A) of the Indian Income Tax 
Act 1922 (in short 'the Act') before the Income·Tax Officer on 
May 26, 1958. In that application he mentioned that the previous 
years' income had been divided 
among 
the 
partners. 
The 
Income-Tax Officer 
rejected that application. 
He did not 
believe the version of the as:ressee that the previous years' income 
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A 
B 
c 
D 
E 
F 
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PUNJAB SILK STOllES v. C.I.T; (Hegde, J.) 
77 
had been divided. 
In appeal, the Appellate Assistant Commis-
sioner · agreed with the conclusion reached by the Income-tax 
Officer. 
On a further appeal being 
taken to the Income-tax 
Appellate Tribunal the Tribunal agreed with the 
conclusions 
reached by the lower authorities. 
Before the Tribunal yet an-
other contention appears to have been taken. That contention 
was that at any rate the partners having divided the income of 
the previous year as evidenced by the balance sheet before the 
assessment was made, the 
assessee firm was entitled for 
its 
registration under section 26(A). The Tribunal did not 
go 
into that question. The High Court agreed with the view taken 
by the Tribunal. 
The only question that arises for decision in this case is 
whether it was incumbent on the part of the assessee to have 
divided the profits of the previous year before it made its appli-
cation for renewal of the registration certificate. For deciding 
this question it is necessary to refer to the relevant provisions of 
the Act as well as the Rules. Section 26(A) of the Act roads 
thus.-
"26A. Procedure in registration of firms :-
( 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 registra-
tion for the purposes of this Act and of any 
other enactment for 
the time being in force 
relating to income-tax or supeMax. 
( 2) The application shall be made by such person 
or persons, and at such times and small contain 
such particulars and shall be in such form, and 
be verified in such manner, as may be pres-
cribed; and 
it shall be 
dealt with 
by the 
income-tax Officer in such manner as may 
be prescribed." 
Turning to the relevant Rules, they are found in. Rules 2, 3 
and 6. These Rules read thu

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