Law:

Section:

Section 184 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] - Firm - Position prior to 1-4-1993 - Assessee-firm was constituted members being two firms and an individual - After death of an individual partner, application for registration of a fresh partnership deed was made under section 26A - Registration was refused on ground that firm was constituted by two firms and an individual which was not valid and profits were not divided among individual partners but between two firms and individual - However, from documents it was found that share of each member was specified - Whether in view of fact that application was signed by partners of firm as it was constituted on date of application as required by law and moreover two schedules contained all necessary information which had got to be supplied by party applying for registration, registration was therefore wrongly refused - Held, yes FACTS The assessee-firm was constituted having members being of two firms and an individual. There was a change in the constitution of the said firm due to death of one individual. An application for registration of the firm under section 26A was made. Said applicant was rejected by the Department on ground that it was not a valid partnership in the eye of law as division of profits had not been made to seven partners but between two firms and an individual and the deed did not specify individual shares of members of firm that were partners in case of firm in question. On appeal : HELD A partnership deed, instead of setting out the names of the individual and the partners of the firm, may compendiously use the name of the firm by making it clear that what was indented was a partnership constituted between the individual and the constituted members of the firm, and intention can be made absolutely clear if the partnership deed itself is signed, not only in the name of the firm, but by all the partners who constitute the firm. On a true reading of the partnership deed in instant case, it was opined that it was the constituent members of the two firms and not the two firms as entities that had entered into the partnership with the…

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