Curable stamp defect in partnership deed does not delay its operative effect for firm registration once duty is made good.

A partnership deed initially insufficiently stamped can still support registration of a firm under section 184 of the Income-tax Act, 1961 once the deficit stamp duty and penalty are paid and the document is admitted in evidence. Under sections 34, 35 and 41 of the Karnataka Stamp Act, 1957, the stamping defect is curable, and the deed then becomes admissible and may be acted upon as if duly stamped. The subsequent curing of the defect does not postpone the deed's operative effect to the date of rectification; it remains effective from the date of execution for registration purposes.

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Issues: Whether a partnership deed initially under-stamped but later made good by payment of deficit stamp duty could be acted upon from the date of its execution for the purpose of granting registration to a firm under the Income-tax Act, 1961.

Analysis: Registration of a firm under section 184 of the Income-tax Act, 1961 depends on the partnership being evidenced by an instrument and the prescribed application being accompanied by the original instrument. The only defect in the present case was that the partnership deed was insufficiently stamped when first produced. Under sections 34, 35 and 41 of the Karnataka Stamp Act, 1957, once the deficiency in stamp duty and penalty is paid and the document is received in evidence, it becomes admissible and may be acted upon as if it had been duly stamped. The defect is therefore a curable one, and the subsequent proper stamping does not postpone the operative effect of the deed to the date of rectification.

Conclusion: The under-stamped partnership deed, after the deficit stamp duty was made good and it was admitted in evidence, was validly capable of being acted upon from the date of its execution. The question was answered in the affirmative and against the Revenue.

Ratio Decidendi: A partnership deed that is initially under-stamped but is subsequently duly stamped and admitted in evidence can be acted upon from the date of its execution for the purpose of registration of a firm.

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