Reference jurisdiction and partnership registration: a deed signed by working partners may still qualify if it embodies the agreement.

Reference jurisdiction may extend to a legal challenge against refusal to register a partnership firm where the assessment proceeded on the footing that the firm was unregistered, so the issue could arise in the appeal against assessment even without a separate appeal on registration. The text also states that a partnership deed may qualify as an instrument of partnership for registration purposes even if signed only by the working partners, provided it is a formal written embodiment of the agreement, specifies the partners' shares, and satisfies the prescribed registration requirements. The refusal to register solely for lack of signatures from all partners is described as unjustified.

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Issues: (i) Whether questions relating to refusal to register a partnership firm could be treated as questions of law arising out of the appellate assessment order and referred to the High Court under the reference provisions; (ii) Whether a partnership deed could qualify as an instrument of partnership for registration purposes even though it was signed only by the working partners and not by all partners.

Issue (i): Whether questions relating to refusal to register a partnership firm could be treated as questions of law arising out of the appellate assessment order and referred to the High Court under the reference provisions.

Analysis: The reference jurisdiction was held to extend to questions of law arising out of the appellate order, and the challenge to the refusal to register the firm could be raised in the appeal against the assessment founded on that refusal. The assessment had proceeded on the footing that the firm was unregistered, so the legality of that footing was a question arising out of the appellate order. The absence of a separate appeal against the registration refusal did not bar reference of the legal issue in the assessment appeal.

Conclusion: The question was referable, and the assessee's application on this point succeeded.

Issue (ii): Whether a partnership deed could qualify as an instrument of partnership for registration purposes even though it was signed only by the working partners and not by all partners.

Analysis: The expression used in the Act was broad enough to cover a written partnership instrument even if it took the form of an agreement executed by working partners in favour of capitalist partners. An instrument was treated as a formal writing embodying the agreement, and the statutory requirement was satisfied if the instrument of partnership specified the individual shares and complied with the prescribed registration procedure. The refusal to treat the deed as valid merely because it was not signed by all partners was therefore erroneous.

Conclusion: The deed was capable of being treated as an instrument of partnership for registration purposes, and the refusal to register on that ground was not justified.

Final Conclusion: The assessee was entitled to have the disputed questions referred, and the order required the Commissioner to state and refer the case on the issues raised.

Ratio Decidendi: Questions of law arising from an assessment founded on refusal to recognize a firm as registered may be referred in the assessment appeal, and a partnership instrument is not invalid for registration merely because it is signed only by working partners if it otherwise embodies the partnership agreement and satisfies the statutory requirements.

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