1978 (3) TMI 82

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ces of the case, the Tribunal was right in directing the Income-tax Officer to grant registration to the assessee-firm under section 26A of the Indian Income-tax Act, 1922 ? " The facts, giving rise to this reference, in brief, are as follows. The assessee-firm, known as Messrs. R. S. Nikhera Construction Co., Durg, consisting of 8 partners was constituted under an instrument of partnership dated December 7, 1956. Under clause 2 of the partnership deed, the partners of the firm formed themselves into three groups to share the profits as follows : Group I Partners Shares 1. Dau Ramasra 2. Dau Murli 0-5-4 3. Dau Deenbandhu Group II Partners 1. Dau Ramdayal 2. Dau Mahasingh 0-5-4 3. Dau Ramsingh Group III Partners....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....1) of the Indian Income-tax Act, 1922, to have the above question referred. The Appellate Tribunal, by its order dated August 31, 1971, drew up the statement of the case and has referred the said question. Section 26A of the Indian Income-tax Act, 1922, merely requires " the individual shares of the partners " to be specified in the instrument of partnership. However, the specification of the shares need not be express, it may be implied. The requirement of the section is satisfied, if the deed can be reasonably construed as clearly implying that the shares of the partners are equal. In construing the partnership deed, as we do, it is susceptible of no other construction. Clause 2 of the deed, no doubt, does not expressly mention the ind....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ents of the section are satisfied, if the shares of the partners could be ascertained, by necessary implication, by reading the deed as a whole. In Kylasa Sarabhaiah v. Commissioner of Income-tax [1965] 56 ITR 219, 223 (SC), their Lordships, while dealing with the question, observed : " The word ' specify ' is used in section 26A and rule 2 as meaning mentioning, describing or defining in detail ; it does not mean expressly setting out in fractional or other shares." The view taken in that case was followed by their Lordships in Parekh Wadilal Jivanbhai v. Commissioner of Income-tax [1967] 63 ITR 485 (SC), where, they, reading the partnership deed as a whole and in the context of the relevant circumstances of the case, held that there....