Law:

Section:

Section 184, read with section 185, of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment year 1972-73 - Whether where in case of assessee-firm there was no partnership deed and it was in deed of dissolution that there was indication as to contribution of capital, merely from such surrounding circumstances, it could not be inferred that there was specification of individual shares of partners - Held, yes - Whether, therefore, assessee-firm was not entitled to registration under section 184 read with section 185 - Held, yes FACTS The ITO refused to register assessee-firm under section 185 on the ground that in so far as the partnership deed omitted to provide for the allocation of both profit and loss, the deed was invalid and there could not be any partnership validly constituted ultra vires the law of partnership. The said finding of the ITO was confirmed by the AAC and the Tribunal. On reference : HELD The Supreme Court in case of N.T. Patel & Co. v. CIT [1961] 42 ITR 224, observed that registration under section 26A confers a benefit on the partners which the partners would not be entitled to but for section 26A. This right can be claimed only in accordance with the statute which confers it and a person seeking relief under that section must bring himself strictly within the terms of that section. This right is strictly regulated by the terms of that statute. Unless the instrument of partnership specifies the individual shares of the partners, the instrument of partnership would not conform to the requirements of section 26A. Having regard to the facts and circumstances of this case and having regard to the specific provisions of section 184 and having regard to the further facts that there was no partnership deed and it was in the deed of dissolution that there was an indication as to the contribution of the capital, merely from other surrounding circumstances, it could not be inferred that there was a specification of the individual shares of the partners. In the circumstances of the case, the assessee-firm was not entitled to be registered under section 184 read with section 185. Note : The case was decided against the assessee.…

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