Judgment

GROVER, J.:- This is an appeal from a judgment of the Andhra Pradesh High Court arising out of a reference made under Section 66 (1) of the Income-tax Act, 1922, hereinafter called the Act of the question whether on the facts and in the circumstances of the case the application under Section 26-A of the Act was filed out of time.

2. The facts are not in dispute. The assessee firm was constituted under a creed of partnership dated October 6, 1955. It was to come into existence with effect from November 5, 1954. The assessee filed an application under Section 26-A of the Act for registration of the firm for the assessment year 1956-57. The previous year of the firm was shown as the year ending October 26, l955. This application was received by the Income-tax Officer on October 14, 1955. On October 20, 1955 the assessee filed before the Registrar of Firms a statement under Section 58 of the Indian Partnership Act, 1932. On November 2, 1955 the Registrar of Firms filed the statement of the assessee and made entries in the register of firms. On March 23, 1961 the income tax Officer passed an order refusing to register the firm under Section 26-4 inter alia for the reason that the application had not been made in time. The appeal taken to Appellate Assistant Commissioner by the assessee failed. The Income tax Appellate Tribunal also upheld the order of the Income-tax Officer and the Appellate Assistant Commissioner. On that a reference was sought and the High Court answered the question referred in favour of the assessee on the ground that the application had been filed in time.

3. Section 26-A of the Act provides that an 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 registration for the purposes of the Act. The application has to be made by such person or persons and at such time and has to contain such particulars etc., as may be prescribed. Rules 2 to 6 (b) of the Rules made under Section 59 of the Act deal with registration of firms. We are concerned with the following material portion of Rule 2

"Such application shall be ........made.......

(a) Where the firm is not registered under the Indian Partnership Act, 1932 (1X of 1932) or where the deed of Partnership is not registered under the Indian Registration Act, 1908 (XVI of 1908), and the application for registration is being made for the first time under the Act,

(i) Within a period of six months of the constitution of the firm or before the end of the previous year of the firm whichever is earlier, if the firm was constituted in that previous year,

(ii) before the end of the previous year in any other case;

(b) Where the firm is registered under the Indian Partnership Act, 1932. (IX of 1932) or where the deed of partnership is registered under the Indian Registration Act, (XVI of 1908) before the end of the previous year of the firm..........",

Now it is common ground that the application for registration was not made within the period prescribed by Rule 2 (a). What has been urged throughout on behalf of the assessees is that the application to the Income tax Officer was governed by Rule 2 (b) and was in time as the firm should be deemed to have been registered not on the date on which it was actually registered by the Registrar of Firms but with effect from the date on which the application for registration was presented to the Registrar. In other words the firm should be considered to have been registered on October 20, 1955 on which date the statement under Section 58 of the Partnership Act was filed by the assessee before the Registrar of Firms:

4. The real question which has to be determined is whether the registration of a firm under the Partnership Act takes place with effect from the date on which the application for registration is made in accordance with Section 58 of that Act. Section 58 (1) provides that the registration of a firm m