Partnership registration required clear loss-sharing terms; a general reference to the Partnership Act was insufficient.

Registration under section 26A of the Indian Income-tax Act, 1922 required strict compliance with the statutory conditions, including a partnership instrument that made the apportionment of losses ascertainable. The prescribed form and schedule contemplated disclosure of loss-sharing because losses affected assessment and set-off. A general clause referring to the Indian Partnership Act was insufficient, since section 13(b) only supplies a default rule where profits are equally shared and does not cure an unresolved loss-sharing arrangement. Where the deed left loss apportionment, including the minor's position, uncertain, the Income-tax Officer could not verify compliance. The firm therefore was not entitled to registration.

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Issues: Whether a firm seeking registration under section 26A of the Indian Income-tax Act, 1922 must have the partnership instrument specify the partners' shares not only in profits but also in losses, and whether the deed in question otherwise made the apportionment of losses ascertainable.

Analysis: Registration under section 26A is a statutory benefit and can be claimed only in strict compliance with its requirements. The prescribed application form and schedule required particulars of the apportionment of loss, if any, because the existence and distribution of losses affect assessment under section 23(5) and the set-off provisions of section 24. A general clause stating that the partners would act according to the Indian Partnership Act did not amount to a specification of loss-sharing. Section 13(b) of the Indian Partnership Act, 1932 merely supplies the default rule that partners contribute equally to losses only where profits are equally shared, and the presumption that losses follow profit shares does not assist where the partners have unequal profit shares and the deed leaves the minor's share of losses unresolved. The instrument therefore did not enable the Income-tax Officer to ascertain the losses' apportionment.

Conclusion: The partnership deed did not satisfy the requirement for registration under section 26A, and the assessee was not entitled to registration.

Final Conclusion: The appeal was unsuccessful and the revenue's view prevailed on the registration question.

Ratio Decidendi: For registration of a firm under section 26A of the Indian Income-tax Act, 1922, the partnership instrument must enable the losses to be ascertained with certainty; a mere general reference to the Partnership Act does not satisfy that requirement where loss-sharing is not otherwise specified.

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