MUSHTAQ HUSSAIN, J.-A partnership deed was drawn to which seven persons namely Muhammad Afzal, Muhammad Irshad, Mst. Ghulam Fatma, Mst. Sardar Begum, Altaf Hussain, Qazi Akbar Hussain and Maulana Saif-ud-Din were partners. On the strength of this partnership deed an application was made for registration of the Firm Messrs Fayyaz others, Lahore on the 2nd of March 1959. Before the apple--cation for registration was made the partnership was got duly registered with the Registrar of Firms.
2. The application was filed on the 24th of March 1960, and was rejected by the order of Mr. Hafeez- Ullah, Income --tax Officer (G-1) Ward, Lahore on the ground that it had not been made within six months of the constitution of the firm or by the end of the previous years, whichever be earlier. It may be mentioned at this stage that three out of these seven partners had been previously carrying on business under the same name and style of Messrs Fayyaz Brothers, Lahore and were duly registered as a firm with Income-tax Department.
3. The assessee felt aggrieved by this order and filed an appeal which was accepted by Mr. Khurshid Muhammad, Appel--late Assistant Commissioner, C. Range, Lahore by his order dated 6th March 1963. The learned Appellate Assistant Com--missioner was of the view that the firm as constituted by the partnership deed referred to above was not a new firm and that even if it were to be treated as a new firm it having been registered with the registrar of Firms under the Partnership Act on the 31st of March 1960, the application was not barred by time. He, therefore, accepted the appeal and directed the Income --tax Officer to register the firm under section 26-A of the Income-- tax Act. The Department was not satisfied with this order and, therefore, assailed it by way of an appeal before the Income-tax Appellate Tribunal. The Tribunal did not see eye to eye with the departmental stand-point and agreeing with the conclusions arrived at by the Appellate Assistant Commissioner dismissed the appeal on 15th June 1965.
4. An application was made by the Commissioner of Income-tax for referring the question of law arising out of this case to this Court for opinion. The Tribunal has, therefore, made a statement of the case and referred the following question to us for opinion:- "Whether on the facts and in the circumstances of the case, the firm could be registered for the assessm ent year 1960-61 under section 26(A) of the Income-tax Act read with rule 2(2)(b) of the Income-tax Rules?"
Learned counsel for the respondent adverted our attention to the provision of section 26 with pa view to canvass support for his submission that the firm had to be assessed as constituted on the ate when the assessm ent was taking place. Section 26 (1) reads 3 follows:- "26 (1) Where, at the time of making an assessment under section 23, it is found that a change has occurred in the con--stitution of a firm or that a firm has been newly constituted, (the assessment shall be made on the firm as constituted) at the time of making the assessment."
6. We have no doubt that if this provision of law was applicable to the facts of the case before us the contention of the learned counsel for the respondent would be unassailable. This unfortunately is not so. This section has been Interpreted by the Privy Council in Maharajadhiraj of Darbhanga v.
Commissi--oner of Income-tax, Bihar & Orissa ((1934) 2 I T R 345). Referring to a similar submission their Lordships observed:- "If that be so, the words "at the time of making the assess--ment" in the course of the process of assessm ent and inasmuch as in the present case a notice was duly served on the late Maharajadhiraj the process of assessment had begun and it would be impossible to say that the event had not occurred which enabled the Tax Officer to find, if the facts justified the finding, that the person on whom this notice had been served had carried on a business and had been succeeded in such capacity by another person."
The ratio of this case is that section 26 (1) is applicable only to such cases where the opening line of the subsection is attracted. In other words it can be applied only if the change in the constitution of the firm has taken place "at the time of making an assessment under section 23". In the opinion of their Lordships s period began with the issuance of a notice under section 22(2) and ended with the passing of the order by the Income-tax Officer.
7. There is no doubt that in the present case the constitution of the firm had taken place much earlier than the notice was issued. Section 26 (1) is, therefore, not applicable to the facts ibis case and the respondent cannot take advantage of this provision.
8. The question whether on the addition of new partners in the firm the resultant entity is a continuation of the old firm or be creation of a new firm was considered by the Supreme Court in Messrs Rivoli Theatres, Karachi v. Commissioner of Income-- tax, South Zone, Karachi and another (1971 SCMR 621). Their Lordships came to the conclusion that:- " Whenever the constitution of a firm changes by the addition of new members as partners, there is a break in the identity of the firm whether or not the name continues to be the same. After a change in the constitution of the firm by the addition of new partners what formerly was the property of the old firm does not continue to be the property of the old firm."
9. It had not been submitted by the learned counsel for the respondent that if this firm is treated as a new firm the apple--cation for registration was presented in time. All that has been submitted is that it was open to the Tribunal to have exercised its discretion in condoning the period of limitation. This is a question which does not arise before us nor are we concerned with it.
10. We feel, therefore, no difficulty in answering the ques--tion posed to us in the negative and holding that the respondents being a new firm and the application not having been made within six months of its constitution or by the end of the previous year the order of the Income-tax Officer rejecting the application for registration was within the four corners of law and would not suffer from any defect. In view of this circumstance we leave the parties to bear their own costs.
11. Before we part with the case we would like to take note of a submission made by one of the respondents Muhammad Afzal. He has submitted that this case has taken a long time and that the firm the income of which had been assessed has not only been dissolved but one of its partners namely Maulana Saif-ud-Din has also died and the others are, not in a position to make payment.
He submitted that he is in a great trouble because of the assessee being treated as an associate person. Unfortunately we do not have any discretion in the matter and cannot grant any relief to him. We have no doubt if he makes an application before the Income-tax Authorities they will give due consideration to his plea.