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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the assessee-firm was entitled to renewal of registration under section 26A when the partnership deed treated the minor as having an equal share in profits and losses and the document was signed by the minor.
Analysis: The partnership deed had to be construed as a whole, but clause (4) expressly provided that the share of each party in profit and loss was one-fifth. That stipulation was clear and specific and could not be treated as a mere typographical error. The deed did not support the view that the minor was only admitted to the benefits of partnership, because the document itself attributed to him a share in losses. Registration under the income-tax law can be granted only on the basis of the actual covenants contained in the executed instrument, and the authorities cannot rewrite the contract by ignoring its express terms. The earlier Supreme Court decision on similar facts governed the matter.
Conclusion: The assessee-firm was not entitled to renewal of registration; the question was answered against the assessee and in favour of the Revenue.
Ratio Decidendi: A firm is entitled to registration only on the terms of the partnership deed actually executed, and where the deed expressly makes a minor share losses, it cannot be treated as a valid instrument for registration by reading down or rewriting its covenants.
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