Partnership using communion property upheld where husband's signature authorised wife's participation and no civil-law bar to registration was shown.

Under the Portuguese civil law governing communion property, a partnership deed signed by the husband was treated as sufficient written authorisation for the wife to enter the business arrangement, and no separate document was required. The spouses could validly convert communion property into partnership property by constituting a firm, and the admission of minor children to the benefits of the firm did not invalidate the arrangement or offend the civil law provisions cited. On those facts, no prohibition was shown against registration of the firm, so the firm was held validly constituted and entitled to registration.

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Issues: Whether the assessee firm was validly constituted and entitled to registration under section 185 of the Income-tax Act, 1961, notwithstanding the provisions of the Portuguese Civil Code governing communion property and the husband's authority over its administration.

Analysis: The partnership deed was treated as sufficient written authorisation by the husband for the wife to enter into the arrangement and to carry on business, and there was no legal requirement that such authority be given by a separate document. The Tribunal's view was accepted that the spouses could transfer communion property to a new assessable entity by constituting a partnership, and the admission of the minor children to the benefits of the firm did not destroy the arrangement or contravene the civil law provisions brought to notice. No provision of the Portuguese Civil Code was shown to prohibit such conversion of communion property into partnership property or to bar registration of the firm on the facts found.

Conclusion: The firm was validly constituted and was entitled to registration; the answer to the reference was in favour of the assessee and against the Commissioner.

Ratio Decidendi: Where the governing civil law does not prohibit alienation of communion property, the spouses may validly constitute a partnership in respect of that property, and the husband's signature to the partnership deed can operate as the written authorisation required for the wife's participation in the business.

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