True partnership must be gathered from the deed and surrounding facts before firm registration requirements are applied.

Proper construction of a partnership deed must be based on the instrument read with surrounding circumstances to identify the true relation between the parties. Here, the deed and conduct showed that the business was to be carried on jointly by Steels, Burma and Ellermans, so Burma was not a mere confirming party but a real partner. Because the firm included a third partner, registration under section 26A of the Indian Income-tax Act, 1922 required an application signed by all partners and stating each partner's share. An application signed only by Steels and Ellermans therefore did not satisfy the statutory requirements.

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Issues: Whether, on a proper construction of the agreement dated 29 November 1928 and the surrounding facts, the partnership was really between Steels and Ellermans alone, so that the registration sought under section 26A of the Indian Income-tax Act, 1922 could not be refused for want of Burma's signature and specified share.

Analysis: The agreement was executed by three parties and, read as a whole, contemplated the amalgamated working of the business by Steels, Burma and Ellermans. The provisions as to management, sharing of profits and losses, termination, arbitration, and joint conduct of the business showed the real relation of partners. Burma's position as a wholly-owned subsidiary of Steels explained why no separate protective rights were needed for it, and the absence of separate payment or separate rights did not negate its status as a partner. Under section 4 and section 6 of the Indian Partnership Act, 1932, the court had to look to the real relation between the parties and the surrounding circumstances, and the deed and facts did not support the theory that Burma was merely a confirming party.

Conclusion: Burma was a partner in the combination along with Steels and Ellermans, and the application signed only by Steels and Ellermans was not in compliance with section 26A of the Indian Income-tax Act, 1922 and rule 2 of the Indian Income-tax Rules, 1922.

Ratio Decidendi: For registration of a firm under section 26A of the Indian Income-tax Act, 1922, the court must determine the true partnership from the deed read with relevant surrounding circumstances; if the deed shows a third partner, the application must be signed by all partners and specify their individual shares.

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