Partnership registration failed where partner-firms and undisclosed individual shares did not satisfy statutory requirements.

Registration under section 26A of the Indian Income-tax Act, 1922 was unavailable where two supposed partners were themselves partnership firms, because the deed and application failed to state the individual shares of the persons behind those firms as required by the statutory scheme. The record further showed that profits were credited to the firms, not to the individuals said to represent them, which supported the view that the partnership structure claimed in the application was not properly constituted for registration purposes. The requirements of section 26A and rule 2 were therefore not satisfied, and the reference to section 19(2)(h) of the Partnership Act did not cure the defect.

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Issues: Whether the assessee firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922 when two of its supposed partners were themselves partnership firms represented by partners, and whether the deed and application satisfied the statutory requirements.

Analysis: The application for registration proceeded on the footing that two partner-firms were constituents of the assessee firm, but the deed and the application did not specify the individual shares of the persons behind those firms as required by the statutory scheme. The record also showed that the profits were credited to the two firms and not to the individuals who purported to represent them, which negatived the contention that they were only individual partners. In such circumstances, the requirements of section 26A and rule 2 were not fulfilled, and the theoretical argument based on section 19(2)(h) of the Partnership Act did not assist the assessee.

Conclusion: The assessee was not entitled to registration and the refusal of registration was justified.

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