Partnership deed construction and technical registration defects may not defeat firm registration when shares are ascertainable from the instrument.

For registration of a firm, the partnership deed must disclose the partners' profit and loss shares with sufficient certainty, but the shares need not be set out in a rigid arithmetical form if they can be worked out from the instrument as a whole. Read as a whole, clause 16 was treated as adequately specifying the major partners' loss-sharing, so registration could not be refused on that ground. An omission to fill column 6 of the registration schedule was treated as a technical defect, since the deed was annexed and the profits had been divided in accordance with it; such an immaterial defect could not defeat registration.

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Issues: (i) Whether, on a reasonable and proper construction of the partnership deed, the shares of the major partners in the losses which the firm may incur were specified so as to satisfy the requirement for registration under section 26A; (ii) Whether the Tribunal was justified in refusing to sustain the rejection of registration on the ground that the application for registration omitted to show the partners' shares in column 6 of the Schedule.

Issue (i): Whether, on a reasonable and proper construction of the partnership deed, the shares of the major partners in the losses which the firm may incur were specified so as to satisfy the requirement for registration under section 26A.

Analysis: The deed had to be read as a whole, and the question was one of construction. A partnership deed need not set out loss-sharing in a particular arithmetical formula if the shares can be worked out from the instrument. Where the minor is admitted only to the benefits of partnership, the remaining partners' shares may be treated as the basis for apportioning loss. A vague or inexpressly framed clause does not negate specification if the real intention to share losses among the majors can be gathered from the document. Applying that approach, clause 16 was capable of being read as providing for loss-sharing among the adult partners on the basis of 93 paise as the unit.

Conclusion: The shares of the major partners in the losses were specified in the instrument, and registration could not be refused on that ground, in favour of the assessee.

Issue (ii): Whether the Tribunal was justified in refusing to sustain the rejection of registration on the ground that the application for registration omitted to show the partners' shares in column 6 of the Schedule.

Analysis: The omission was treated as a technical and curable defect, not a material one, because the partnership deed containing the relevant shares was appended to the application and the profits had been divided according to that deed. The revenue could not rely at a late stage on an immaterial procedural defect to defeat registration. Fair procedure required that the assessee be given an opportunity to remove such defects, and refusal of registration on that basis would be unjustified.

Conclusion: The Tribunal was justified in not sustaining the refusal of registration on that ground, in favour of the assessee.

Final Conclusion: The partnership was entitled to registration, and the revenue's objections to registration failed both on construction of the deed and on the alleged defect in the application.

Ratio Decidendi: For registration of a firm, the deed need only disclose the partners' shares in profit and loss with sufficient certainty so that they can be worked out from the instrument as a whole; a minor or technical defect in the registration application cannot justify refusal where the deed itself supplies the necessary particulars.

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