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TMI Blog1966 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... rtnership did not specify the individual shares of the partners as required by section 26A of the Act ?" The material facts, as appearing from the statement of the case, are these. The assessment year is 1958-59, the corresponding previous year being the one which ended on 23rd October, 1957. The assessee is a firm consisting of three partners, namely, Chimanlal, Mangalchand and Hukumchand and one minor, Gulabchand, has been admitted to the benefits of the partnership. The firm was constituted by a deed of partnership dated 29th September, 1954, the material terms of which, as translated from Hindi, read as follows : "Clause 6 : shares in profit and loss of this partnership have been decided as under (Repetition of this very sentence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Umaji M.T. Cloth 29-9-1954 Market, Indore Telgali Malharganj Mangalchand, s/o Chimanlal do do Hukumchand, s/o Chimanlal do do Gulabchand, s/o Chimanlal do do -------------------------------------------------------------------------------------------------------------------------------------------------- [cont.] -------------------------------------------------------------------------------------------------------------------------------------------------- Share in the balance profits or loss (annas and pies in the rupee) -------------------------------------------------------------------------------------------------------------------------------------------------- 0-4-0 0-4-0 0-4-0 0-4-0------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecify the individual shares of the partners as required by section 26A of the Act and that the renewal of registration could not be refused on the ground that it did not do so. In order to qualify for registration under section 26A of the Act, there must be in existence a valid and genuine firm constituted by an instrument of partnership, which specifies the individual shares of the partners. Then an application for registration on behalf of the firm should be made in accordance with the requirements of rules 2 to 6B of the Indian Income-tax Rules, 1922. If a firm desires to have this privilege, it must conform strictly to those requirements : Ravulu Subba Rao v. Commissioner of Income-tax and N. T. Patel & Co. v. Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st some of them were not specified. The law requires that the individual share of each partner must be specified in the instrument of partnership--M. Kannappa Naicker and Co. v. Commissioner of Income-tax and Steel Brothers and Co. Ltd v. Commissioner of Income-tax. It is not that in the case before us, the individual shares of partners, including the share to the benefits of which the minor has been admitted are, in that sense, not specified in the instrument. All that is urged in support of the view that shares are not so specified is that it is not stated in the instrument how the loss appertaining to the one-fourth share to the benefits of which the minor has been admitted would be shared. Shri Chitale, who appeared for the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the facts of the case before us because, as we would show immediately, the shares in losses have not been left unspecified. It appears to us that there was a mistake in appreciating the true meaning of the Hindi word panti as occurring in clause 6 of the instrument of partnership. As is well known, that word means "share" and not "profits". That being so, the correct translation of clauses 5 and 6 would read as follows : "Clause 5 : shares in profit and loss of this partnership have been decided as under (Repetition of this very sentence is there). Clause 6 : Seth Chimanlal Umaji--age 50--4 as. Seth Mangalchand, s/o. Chimanlal--age 21--4 as. Hukumchand, s/o. Chimanlal--age 18--4 as. Thus, the share of twelve annas in a rupee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recitals of the instrument of partnership dated 29th September, 1954, it should be held that it did not fail to provide for the losses relating to the minor's four annas share. In any event, as laid down by the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income-tax and Commissioner of Income-tax v. Shah Mohandas Sadhuram, such instruments of partnership should be construed reasonably. If the instrument in this case is so construed in the light of the fact that the minor was admitted to the benefits of the partnership, the position in regard to the losses relating to the minor's share does not remain undefined or unspecified. In view of the foregoing considerations, our answer to the question referred to us is that, in the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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