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Issues: Whether the firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922, when the partnership deed did not expressly state the individual shares of all partners but indicated group-wise profit sharing.
Analysis: Section 26A required the individual shares of the partners to be specified in the instrument of partnership, but such specification need not be express and may be gathered by necessary implication. Reading the deed as a whole, the grouping of partners and the stipulation that each group was entitled to one-third share in the profits, together with the clause regarding loss-sharing in the same proportion, clearly indicated equal sharing within each group. The application for registration was also signed by all partners, and the department had itself assessed the partners on that basis. The deed therefore satisfied the statutory requirement of specification of individual shares.
Conclusion: The firm was entitled to registration under section 26A, and the question was answered against the Revenue and in favour of the assessee.
Ratio Decidendi: Where a partnership deed, read as a whole, clearly implies the individual shares of partners, the requirement of specification under section 26A is satisfied even if the shares are not expressly stated in fractional form.
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