1983 (3) TMI 77

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....ently, internal audit raised an objection about the granting of registration as there was no indication about the profit-sharing ratio in the deed of partnership. The ITO took action under section 186(1) for cancelling the registration granted under section 185 of the Act for the first year and for cancelling the continuation of registration allowed under section 184(7) of the Act for the second year. The assessee objected to the action of the ITO and also submitted a deed of rectification allegedly written on 21-7-1975. The major controversy before the ITO was about the genuineness of this rectification deed and both the ITO and the AAC were of the opinion that the deed of rectification was an after thought, which was not executed on 21-7-....

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....67, Next he cited a Supreme Court ruling in the case of Parekh Wadilal Jivanbhai v. CIT [1967] 63 ITR 485 wherein it was held in a similar case that partnership deed should be read as a whole and the relevant circumstances be taken into account to determine the fact that shares were equal in the partnership profits or losses. Shri Mahajan submitted that profit was, in fact, divided equally amongst the partners and credited to their personal accounts in the books and in Form No. 11 filed for registration for the assessment year 1976-77 the shares were shown to be equal. It was also stated that Form No. 12 for continuation of registration was filed within time. 4. On behalf of the revenue, it was contended that the view taken by the lower ....

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....d by the assessee, namely Sheonath Prasad Motilal's case, certainly brings out that registration can be cancelled only if the circumstance of non-genuineness of the firm exists and not for any other lapse found later on by the ITO. 6. We are also inclined to the view that non-omission of profit-sharing ratio in the partnership deed in the facts and the circumstances of the assessee's case as pointed out by its counsel will not be fatal for the granting of registration. The Supreme Court authority in the case of Parekh Wadilal Jivanbhai certainly supports the assessee's case. The assessee has claimed that the shares of its partners are equal and has allocated the profits amongst the partners on that basis in the books of accounts and file....