TMI Blog1953 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... artners which is printed at page 4 of the paper-book. This instrument of partnership recites that two partners, Nauhria Singh and Ram Singh, started it in the year 1912 and in 1938 another partner Chanan Singh was taken into partnership and on the death of Ram Singh, Gurdial Singh his son became a partner; the shares of the partners remaining the same, only Gurdial Singh took the place of Ram Singh. This partnership deed provides:- ............... the parties ................... mutually covenant and agree to continue as partners in the said business upon and subject to the terms and con ditions stated below .......................... 3. That the partnership business shall be deemed to have commenced in the present constitution on 23rd June, 1944. . 7. That a statement of assets and liabilities of the partnership business as ending on 31st March, 1949, has been drawn up and the credits to the capital accounts of the parties hereto are accepted and confirmed. ........................................................... 11. That the parties hereof will be entitled to the following salaries with effect from 1st April, 1949, which will be debita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............. Such an application has to be signed by all the partners and has to be made before or after the dissolution of the firm in respect of the assessment to be made on its income up to the date of dissolution and if the application is made after the dissolution it has to be signed by all the persons or their legal representatives who were partners in the firm. Under rule 3 the application has to be accompanied by the original instrument of partnership under which the firm is constituted . Rule 4 prescribes the powers of the Income-tax Officer in regard to registration. It says:- 4. (1) If, on receipt of the application referred to in Rule 3, the Income-tax Officer is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate in the following form, namely:- 'This instrument of partnership has this day been certified copy of an certified copy of an registered with me, the Income-tax Officer for .................... in the Province of .................. und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter clearer. This section mentions the registration of an instrument of partnership governing the distribution of profits which shows clearly that the instrument which has to be registered is the one relating to the accounting period. The matter has been put by Sampath Iyengar at page 846 in the following words:- The language of sub-section (2) of Section 28 relating to the levy of penalty makes the matter yet clearer. It speaks of registration of the instrument of partnership governing the distribution, which un-unmistakably indicates that the deed that has to be registered is the deed relating to the accounting year. The new clause (e) to Rule 2 with its proviso, along with the corresponding amendments made in Rules 3 to 6 refer to the registration of a firm after dissolution at the instance of the ex-partners or the legal representatives of any deceased partner. This shows that there need be no firm in existence at the time of the application for registration. Rules 4 and 6A also enable registration of a firm that is or was in existence. If it is registration of a firm that was in existence, the deed to be registered could only be that of the previous year and not the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ................. . Lopes, L J., was of the same opinion and said at page 614:- I am inclined to think that the true meaning of those words is this, that they refer to companies constituted by the intervention of the legislature or other tribunal competent to constitute companies, and do not refer to consensual contracts such as the present . The learned Advocate-General has relied on three cases in support of his argument. He submits that the assessees were not constituted under an instrument of partnership in the account year and therefore they are not entitled to registration under Section 26A. He refers to a passage from Lindley on Partnership, eleventh edition, at page 116, where it is stated:‑ Again, persons may agree that as between themselves, the partnership between them shall be deemed to have commenced at some time before its actual commencement. Proof of such an agreement as this would not enable a stranger to make the parties to it liable to him as partners for what took place before the partnership in point of fact began. As to third parties, such an agreement is res inter alios acta, which does not affect them in any way .................... . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w agreement . He then referred to the speech of Lord Selborne in Neilson v. Mossend Iron Co. (1886) 11 App. Cas. 298, and observed:- These pronouncements of the highest tribunal do not turn on any special provision of any statute but are based on the general principles of the law of partnership and we should, we think, endeavour respectfully to follow those high authorities . Reference was next made to Commissioner of Income-tax, Madras v. Gelli Krishnamurthy [1940] 8 ITR 121 where the facts were similar in that a partnership deed which was for a term of five years was not renewed by a fresh instrument but the business was carried on and during the assessment year 1937-38 the assessees applied for the renewal of the certificate. It was held that the partnership deed not having been renewed by a written instrument, there was no instrument of partnership within the meaning of Rule 2 of the Income-tax Rules. In a later case Commissioner of Income-tax, Madras v. D. Arokia-swami Chelti Co. [1948] 16 ITR 404 , it was held that for a renewal of registration of a firm under Section 26A of the Indian Income-tax Act the existence of an instrument of partnership operative at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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