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TMI Blog1961 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... s the principal deed. The new partnership like the old one was to end on March 31, 1954. On March 29, 1954, a new partnership was entered into and a sixth partner was taken and a new deed was executed. The new partner contributed Rs. 40,000 as his share to the capital but in the partnership deed no express provision was made as to the manner in which profits and losses were to be divided between the partners. In order to rectify this, a deed of rectification was executed on September 17, 1955, which was after the close of the account year 1954-55. This deed recited that an error had crept in typing the partnership deed dated March 29, 1954, by omitting to type clause 21 of the old partnership deed in the new deed. The parties had, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal was taken to the Income-tax Appellate Tribunal which also failed. At the request of the appellant the following question was referred to the High Court for its opinion : " Whether the assessee firm is entitled to registration under section 26A of the Income-tax Act for the assessment year 1955-56 ? " The High Court held that under section 26A of the Act the factual existence in the year of account of an instrument of partnership was necessary, a requisite which, in the present case, was lacking and, therefore, the provisions of section 26A were not satisfied and that the specification of shares only took place on September 17, 1955, when the deed of rectification was executed. The question was, therefore, answered in the negative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 41(a). In the event of the dissolution of the partnership the capital available for distribution as per the balance sheet, except for debts outstanding for collection and reserve fund, shall be paid off to the outgoing partner in proportion of the capital contribution of the outgoing partner to the total contribution of all the partners, including extra capital subscription paid, if any, under clause 9. " None of these clauses specify the shares of the partners. Clause 9 has reference to extra contribution made by the partners which was to be treated as capital contribution for the purpose of dividing profits but was not otherwise taken to be paid up capital. Clause 11 provides for interest on the extra capital subscribed. Clause 34 au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o income-tax or super-tax. " For the purpose of this case the relevant words of that section are " constituted under an instrument of partnership specifying the individual shares of the partners. " Therefore, unless the instrument of partnership specified the individual shares of the partners the instrument of partnership does not conform to the requirements of the section. In R. C. Mitter & Sons v. Commissioner of Income-tax it was held that the instrument of partnership to be registered should have been in existence in the accounting year in respect of which an assessment is being made. At page 202, Sinha, J. (as he then was), said : " It is, therefore, essential, in the interest of proper administration and enforcement of the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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