Partnership deed interpretation supports firm registration where equal partner shares are implied from the instrument and surrounding conduct.

A partnership deed may support firm registration even where the profit-sharing ratio is not stated in express fractional terms, if the instrument read as a whole and the surrounding facts reasonably show the partners' shares. Clauses referring to distribution of net profits and losses in proportion to respective shares, the deed's subjection to the Indian Partnership Act, equal capital contributions, profit division reflected in the accounts, and the Form 11 declaration were treated as consistent with equal shares. The stated conclusion is that refusal of registration was not sustainable and the firm was entitled to registration.

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Issues: Whether the assessee-firm was entitled to registration where the partnership deed did not expressly set out the profit-sharing ratio, but the intention of equal shares was said to arise from the deed, the surrounding clauses, and the conduct of the partners.

Analysis: The deed was read as a whole, and the clauses providing for distribution of net profit and losses in proportion to the partners' respective shares, together with the clause making the partnership subject to the Indian Partnership Act, 1932, were taken to indicate equal shares. The equal capital contributions, equal division of profits reflected in the accounts, and the Form 11 declaration were treated as supporting the same conclusion. The governing principle applied was that specification of shares need not always be express in fractional terms if the shares can be gathered reasonably from the instrument and the proved surrounding facts; the deed need not be rejected merely because the ratio is implied rather than expressly stated.

Conclusion: The refusal of registration was not sustainable and the assessee-firm was entitled to registration.

Final Conclusion: The appellate order denying registration was reversed and the assessee succeeded on the substantive question of firm registration.

Ratio Decidendi: Shares of partners for registration purposes may be specified by necessary implication from the partnership deed read as a whole and the proved conduct of the partners, and need not always be expressly stated in fractional form.

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