Partnership deed uncertainty defeats registration where partner shares and capital contributions cannot be determined with certainty.

A partnership firm was refused registration because the instrument did not state the capital to be contributed by each partner, making the computation of interest on excess capital and the shares of profit and loss uncertain. Registration under section 26A required a partnership deed that clearly specified the individual shares of the partners and permitted profits and losses to be determined with certainty from the operative terms of the instrument. The court held that vague drafting in the deed itself was fatal, and the refusal of registration was therefore justified.

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Issues: Whether the firm was entitled to registration under section 26A of the Indian Income-tax Act where the partnership deed required capital contribution in the profit-sharing ratio but did not specify the capital to be contributed by each partner.

Analysis: Registration under the partnership registration scheme required an instrument of partnership specifying the individual shares of the partners and the business had to be carried on in accordance with the operative deed. The deed in question fixed profit-sharing ratios but also made capital contribution and interest on excess capital material to the computation of net profits and losses. Since the deed did not specify the capital of the firm, the amount of interest payable on excess contribution could not be determined, and the individual shares of profit and loss could not be ascertained with certainty from the instrument itself. The authorities and the Tribunal were therefore justified in treating the deed as vague and in refusing registration. Decisions where non-adherence to terms was at issue did not assist the assessee because the present refusal rested on uncertainty in the deed itself.

Conclusion: The firm was not entitled to registration under section 26A of the Indian Income-tax Act, 1922.

Ratio Decidendi: A firm is not entitled to registration unless the partnership instrument clearly specifies the individual shares of the partners and enables the profits and losses to be determined with certainty in accordance with its operative terms.

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