Partner registration and income apportionment: private arrangements cannot divert firm profits or alter personal tax assessment.

A partner who obtained registration of a firm on the footing that he was an individual partner was bound, in personal assessment, by that apportionment of income. The assessment scheme under Section 23(5)(a) required the share of each named partner to be included in that partner's total income, and an objection to the allocation had to be raised in the firm's assessment, not the partner's personal assessment. A later private arrangement among persons connected with the firm could not amount to diversion of income by overriding title; at most it was an application of income already earned. Amounts payable to others were also not deductible as expenditure incurred in earning the income.

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Issues: Whether the entire share of profits from Benares Steel Rolling Mills could be included in the individual assessment of the assessee.

Analysis: The assessee had signed the registration application of the firm as an individual partner, and the firm was registered on that basis. Once registration was granted, the scheme of assessment under Section 23(5)(a) required the share of each named partner to be included in that partner's total income. The claim that the assessee was only a representative of another firm was inconsistent with the representation on which registration had been obtained, and the other firm could not itself be a partner of the registered firm. The second proviso to Section 30(1) also supported the view that any objection to the apportionment had to be taken in the assessment of the firm, not in the personal assessment of the partner. The later agreement among the partners of the other firm could not amount to a diversion by overriding title; at most it was a voluntary arrangement for application of income already earned. Nor could the amounts payable to the other partners be treated as expenditure incurred in earning the income.

Conclusion: The question was answered in the affirmative, and the entire share of profits from Benares Steel Rolling Mills was rightly includible in the individual assessment of the assessee.

Ratio Decidendi: A partner who has obtained registration of a firm on the footing that he is an individual partner is bound, in personal assessment, by that apportionment of income, and a private arrangement cannot convert such income into that of another entity or constitute diversion by overriding title.

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