Specified profit shares in a partnership deed can satisfy registration requirements even when fixed sums are used instead of proportions.

A partnership deed satisfies the registration requirement under the Income-tax Act when it evidences the partnership and clearly specifies each partner's share in profits, even if junior partners are assigned fixed sums rather than proportional fractions. The decisive point is specification of individual entitlements, not the form in which the shares are expressed. Where the deed expressly fixes the distribution of net profits and reflects a lawful profit-sharing arrangement chosen by the partners, the firm meets the statutory condition for registration and the assessee is entitled to that registration.

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Issues: Whether the assessee-firm was entitled to registration under section 184(1)(ii) of the Income-tax Act, 1961, where the partnership deed provided fixed sums to the junior partners instead of a stated proportion of profits.

Analysis: Registration of a firm requires an instrument evidencing the partnership and specification of the individual shares of the partners. The Revenue's objection was that the junior partners were to receive fixed amounts, and therefore their shares were not specified in proportionate terms. The clause in question, however, expressly dealt with division of net profits and fixed the junior partners' shares in those profits at stated amounts. The requirement is that the shares must be specified, not that they must necessarily be expressed as proportional fractions. The arrangement was consistent with the principle that partners may agree to share profits in any manner they choose, including by fixed sums in lieu of variable profit participation.

Conclusion: The firm satisfied the statutory requirement and was entitled to registration; the question was answered in the affirmative and in favour of the assessee.

Ratio Decidendi: For registration of a firm, the individual shares of partners are sufficiently specified if the partnership deed clearly fixes each partner's entitlement to profits, even where that entitlement is stated as a fixed sum rather than as a proportional fraction.

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