1987 (6) TMI 71

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....and Shri Gulam Nabi were 75 per cent and 25 per cent share in the profits of the partnership. The assessee applied for registration by filing Form No. 11 alongwith copy of partnership deed on 27th Oct., 1979. The ITO found that the deed dt. 7th Feb., 1979 was silent on the point as to how the losses were to be shared between the partners. He was of the opinion that he assessee was to entitled to registration. The assessee before the ITO filed copy of rectification deed dt. 10th Nov., 1982 to show that from the very start the partners had agreed to share the losses in the same ratio in which they were entitled to share the profits and thus the inadvertent clerical omission in the deed dt. 7th Feb., 1979 stood rectified. The ITO held that sub....

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....he above decision their lordships with reference to s. 13(b) of the Indian Partnership Act made the following observations: 'In the absence of any indication to the contrary, where the partners have agreed to share the profits in certain proportions, the presumption is that the losses are also to be shared in like proportions. Jeasel M.R. states the principle in Inre. Albion life Assurance Society as follows: "It is said, as a general proposition of law, that in ordinary mercantile partnerships there is a community of profits in a definite proportion. The fair inference is that the losses are to be shared in the same proportion". Their lordships further approvingly quoted decision of Ramesam. J in Picthiah Chettair vs. Subramanian ....

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....dt. 30th April, 1981 in similar circumstances has already applied the above decision of the Supreme Court and held that firm was entitled to registration. We therefore, hold that the assessee was entitled to registration. 4. Apart from the above facts, there are other circumstances. One Schedule to Form No 11 submitted by the assessee in which in column No. 2 the assessee in gave the ration in which the partners were liable to share profits as well as the losses of the partnership and secondly the rectification deed confirming that from the very start it was agreed that partners would share losses in the ratio of 75 per cent and 25 per cent have wrongly been ignored by the assessing authority in this case No doubt rectification deed was ....