Strict compliance for partnership registration under tax law failed where the deed did not match the firm's constitution.

Registration under section 26A of the Income-tax Act, 1922 required a valid instrument of partnership showing the existing partners and their individual shares, and the annual division or credit of profits in accordance with the statute. The partnership deed here named only two partners and treated the third person as a minor admitted to benefits, so it did not support registration of the altered firm constitution. The record also showed that profits were neither divided nor credited as required. Refusal of registration was therefore justified on both grounds, and the question referred was answered in favour of the Revenue.

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Issues: Whether the income-tax authorities were justified in refusing registration to the firm under section 26A of the Income-tax Act, 1922.

Analysis: Registration under section 26A was available only to a firm constituted under an instrument of partnership specifying the individual shares of the partners. The partnership deed relied on by the assessee showed only two partners and described the third person as a minor admitted to the benefits of partnership; it did not constitute an instrument showing the present firm of three partners. The authorities were therefore justified in holding that the deed could not support renewal of registration for the altered constitution of the firm. In addition, the law required annual division or credit of profits between the partners, and the record showed that the profits of the business were neither divided nor credited as required.

Conclusion: The refusal of registration was justified on both grounds, and the answer to the referred question was in the affirmative, against the assessee and in favour of the Revenue.

Ratio Decidendi: A firm seeking registration under section 26A must strictly satisfy the statutory conditions, including a valid instrument of partnership showing the existing partners and their shares and annual division or credit of profits in accordance with the Act.

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