Judgment

BHARGAVA, J. : This appeal arises out of proceedings for registration of the firm, Juggilal Kamalapat, Calcutta, under Section 26A of the Income-tax Act (hereinafter referred to as "the Act") for the assessment year 1943-44. Prior to this assessment year, the three Singhania brothers, Sir Padampat Singhania. Kamlapat Singhania and Lakshmipat Singhania. were carrying on a hosiery business in the name of Messrs. Juggilal Kamalapat with Head Office at Kanpur and a branch at Calcutta. On November as 1939, these three brothers executed a deed of partnership, by which one Jhabbarmal Saraf was taken in as a partner, and under this deed, all the four partners had equal shares. On October 27, 1941, the three brothers executed a trust deed known as the Kamla Town Trust, the principal object of which was the welfare of the employees of Juggilal Kamalapat Cotton Spinning and Weaving Mills Ltd. Under this deed, the three brothers became the first trustees. On December 2, 1942, a Deed of Relinquishment was executed by the three brothels relinquishing their rights and claims to all the properties and assets of the firm, Juggilal Kamalapat, in favour of Jhabbarmal Saraf and of themselves in the capacity of the three first trustees of the Kamla Town Trust. This relinquishment deed purported to recognise an earlier oral relinquishment which was stated as having been operative with effect from March 26, 1942. On December 1, 1942, a Partnership Deed was executed between Jhabbarmal Saraf and the three trustees, by which they purported to constitute a partnership firm taking effect from March 27, 1942, the two partners in the firm being Jhabbarmal Saraf and the Kamla Town Trust represented by these three trustees. The shares of the two partners in this partnership were: Kamla Town Trust-As. 0-12-0, and Jhabbarmal Saraf- As. 0-4-0. The firm, Juggilal Kamalapat, which had been carrying on the business of hosiery, owned both movable and immovable properties at Belur near Calcutta. The immovable properties consisted of lands and buildings constructed for the use of the factory for manufacturing hosiery, and they were shown in their balance-sheet as properties belonging to the firm. The firm had also been showing expenses incurred for maintaining or making additions or alterations to these buildings in their accounts and had been claiming depreciation in respect of them. It was in these circumstances that the new partnership purporting to consist of the Kamla Town Trust and Jhabbarmal Saraf, applied for registration under S. 26A of the Act for the assessment year 1943-44.

2. The Income-tax Officer rejected this claim and, in doing so, also took notice of the fact that a sum of Rs. 50,000 had been introduced into this partnership firm by the Trust. The reason given by the Income-tax Officer for not accepting the registration need not be mentioned here, because that reason was not accepted by the Tribunal and was not urged before the High Court or before this Court on behalf of the Commissioner. On appeal, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer for reasons given by him which were different from those given by the Income-tax Officer. Those reasons are again immaterial, because those reasons were not accepted by the Tribunal or the High Court and have not been relied upon before us.

3. The Income-tax Appellate Tribunal upheld the order rejecting the application for registration under S. 26A on the main ground that the Relinquishment Deed, dated 2nd December 1942, being an unregistered document, could not legally transfer rights and title to the immovable owned by the firm in favour of the Kamla Town Trust, and that the transfer of the immovable properties being thus legally ineffective and they being not separable from the other business assets, the entire business of the firm was not legally transferred in favour of the Kamla Town Trust. Two other reasons were also given that the constitution of the new firm w