Law:

Section:

section 184 of the income-tax act, 1961-registration of firm-assessee-firm con-sisted of two individuals and a huf-partenership deed was signed by the two individuals and karta of huf-whether the partnership was between three individuals entitling the assessee-firm the benefits of registration under section 184(7)-held, upon proper construction of the partnership deed, that it was a valid partnership entitled to registration Facts The assessee-firm was constituted under a deed of partnership, dated 18-5-1953 between Shri R.S. Singh, CD. Singh and R.B. Singh, and S.D. Singh, a HUF of which R.B. Singh was the karta. It was provided that on the death of any partner, it would not be dissolved but carried on by the surviving partners and the male heir or legal representative of the deceased partner should be admitted as a co-partner with all the rights and liabilities of the deceased. It was further provided that the profit and loss would be divided amongst the partners, as follows: Shri R.S. Singh 6 Annas ; Shri CD. Singh 4 Annas ; Shri R.B. Singh and Shri S.D. Singh 6 Annas. The deed was signed by Shri R.S. Singh, Shri CD. Singh and Shri R.B. Singh. The assessee-firm had been granted registration in the past years. In the assessment year 1962-63, the assessee-firm filed a declaration as required under section 184(7) for continuation of registration. The ITO refused registration as, according to him, the partnership was between two individuals and a HUF and hence invalid. The AAC upheld the ITO's order on the basis of the description of the parties in the preamble and in the clause dealing with sharing of profit in the partnership deed and also because the share of the net profit was created in the capital account of the HUF. The assessee-firm contended before the Tribunal that it was the karta who was the partner as would be evident from the clause providing for induction of legal heirs in the case of death of a partner. The Tribunal accepted this contention and held that the karta was the partner in his individual capacity as he had signed the deed and as such, the partnership was valid and entitled to registration under section 184(7). On reference: Held A…

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