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Business > Companies

Nadars strategy of Sivakasi Matches Exporting Company II

It is always open to a person, consistently with the law, to so arrange his affairs that be may reduce his tax liability to the minimum permissible tinder the law. The fact that the liability to tax may be reduced by the adoption of an expedient which the law permits, is wholly irrelevant in considering the validity of that expedient. But where the law prescribes conditions for obtaining the benefit of reduced liability to taxation, those conditions, unless otherwise provided, must be strictly complied with, and if they are not

so complied with, the taxing authorities would be bound to refuse to give the taxpayer the benefit claimed. When application for registration of the firm is made, the Incometax Officer is entitled to ascertain whether the names of the partners in the instrument are of persons who have agreed to be partners, whether the shares are properly specified and whether the statement about the shares is real or is merely a cloak for distributing the profits in a different manner. If all persons who have in truth agreed to be partners have not signed the deed or their shares are not truly set out in the deed of partnership, it would be open to the Incometax Officer to decline to register the deed, even if under the general law of partnership the rights and obligations of the partners eo nomine thereto may otherwise be adjusted. As a corollary to this, if the requirements relating to the form in which the petition is to be presented are not complied with, and the relevant information is withheld, the Incometax Officer may be justified in refusing registration.

The High Court was in error in holding on the question submitted that the registration of the assessee under s. 26-A of the Income-tax Act was wrongly refused.

Bsram B


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