Written partnership deed can support registration despite oral origin, with the deed operating from its own date.

A firm that began by oral agreement is not barred from registration under Section 26A if, at the time of application, its partnership terms have been reduced into writing and the application is supported by the instrument. The written deed must constitute the firm from its own date and specify the individual shares of the partners; it cannot operate retrospectively for a closed assessment year. A recital that the partners had previously carried on business on similar terms does not change the legal effect of the instrument. The firm may therefore be treated as constituted under the deed from the date of execution for future purposes.

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Issues: Whether a firm which originally came into existence by oral agreement can be registered under Section 26A of the Income-tax Act when, at the time of the application, the partnership terms have been reduced into writing and the application is accompanied by the instrument.

Analysis: Section 26A requires a firm to be constituted under an instrument of partnership specifying the individual shares of the partners. The decisive question is whether the prior oral origin of the partnership prevents the firm from being treated as constituted under the later deed. The earlier deed cannot operate retrospectively for the assessment year already closed, but there is no objection to treating the firm as constituted under the written instrument from the date of that instrument for future purposes. The mere recital in the deed that the partners had previously carried on business on the same terms does not alter the legal effect of the instrument as constituting the firm from its own date.

Conclusion: The prior existence of the partnership by oral agreement is not a bar to registration. The firm is entitled to be treated as constituted under the instrument of partnership from the date of the deed, and the question is answered in the affirmative.

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