M.S Menon, C.J:— This is a reference by the Income-tax Appellate Tribunal, Madras Bench, under section 66(2) of the Indian Income-tax Act, 1922. The question referred is:
“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in refusing registration of the firm?”
2. The registration sought was in respect of the assessment year 1960-61. The accounting period concerned was the twelve months from April 1, 1959, to March 31, 1960. Annexure “A” to the statement of the case is the deed of partnership. It begins by saying:
“This DEED OF PARTNERSHIP is made on the First day of March, One Thousand Nine Hundred and Fiftynine, BETWEEN Sri P.C Cherian, Madukanil, Manganam, Kottayam of the first Part; Sri V.P Thomas, Velajattil House, Old Bazar, Kottayam, of the second part; Sri Korah Mathew, Pulickal House, Puthenangadi, Kottayam, of the third part; Sri K.K Itty, Kadiyanthuruthil, Puthuppally, Kottayam, of the fourth part; and Sri K.T Kuruvilla Pandarathil Veedu, Kiliroor, Kottayam, of the fifth part”, and ends with the words:
“IN WITNESS WHEREOF the partners hereto have signed this DEED on the day and year first above written.”
3. The stamp paper on which the deed of partnership is engrossed was purchased only on March 23, 1959, as can be seen from the endorsement made by the vendor of that stamp paper. In view of this the Appellate Tribunal came to the conclusion that the deed of partnership could not have been executed on March 1, 1959, that is, 22 days prior to the purchase of the stamp paper itself.
4. Section 26A of the Indian Income-tax Act, 1922, reads as follows:
“(1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or super-tax.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the Income-tax Officer in such manner as may be prescribed.”
5. As stated by the Supreme Court in R.C Milter & Sons v. Commissioner of Income-tax [1959] 36 I.T.R 194; [1959] Supp. 2 S.C.R 641., the words “constitued under an instrument of partnership” in the section include not only firms which have been created by an instrument of partnership but also those which may have been created by word of mouth but have been subsequently clothed in legal form by reducing the terms and conditions of the partnership to writing. In other words, firms which were created by word of mouth but the constitution of which has subsequently been reduced to writing can also be registered under the section.
6. We are, however, not dealing with a case in which the partnership was created by word of mouth and the constitution has subsequently been reduced to writing. We are dealing with a case in which the creation of the partnership and the execution of the document synchronise and the creation itself was by the instrument in writing.
7. In Niadar Mal Jagdish Parshad v. Commissioner Of Income-Tax, Simla [1959] 37 I.T.R 349, 357 F.B. a full Bench of the Punjab High Court dealt with the decision above-mentioned and the other decisions on the subject, and said:
“It will be clear from the language of section 26A, the rules on the subject and the decisions quoted above, that the requirements of law are (a) the factual existence of the partnership during the whole of the accounting year either under an oral agreement or a written instrument, (b) the existence of a written instrument during the accounting year specifying the individual shares of the partners.”
8. In this case it is not possible to say that the partnership was factually in existence during the whole of the accounting year. The accounting period with which we are concerned, as already stated, is the twelve months from April 1, 1959, to March 31, 1960. All that can be said is that the deed of partnership was executed on some date between March 23, 1959, the date on which the stamp paper was purchased, and April 29, 1959, the date on which the application for registration was filed. The exact date is unknown and no attempt has been made to establish the same.
9. If the deed of partnership was executed subsequent to April 1, 1959, then the partnership would not have been in existence for the whole of the accounting period, namely, April 1, 1959, to March 31, 1960, and, in the light of the decision of the Punjab High Court, the firm will not be entitled to registration under section 26A of the Indian Income-tax Act, 1922. Quite apart from this, the application for registration mentions the date of admittance to partnership as March 1, 1959, and as it has not been established that the partnership was, as a matter of fact, created on that date, we cannot but hold that the Appellate Tribunal was right in affirming the refusal of registration by the Income-tax Officer by his order dated March 21, 1961. In the light of what is stated above, the question referred has to be answered against the assessee and in favour of the department. We do so; but, in the circumstances of the case, without any order as to costs.
10. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be sent to the Appellate Tribunal as required by sub-section (5) of section 66 of the Indian Income-tax Act, 1922.