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Dawjee Dadabhoy And Co. v. Commissioner Of Income-Tax, Calcutta.
Structured Summary of the Opinion (G.K. Mitter, J.; Ray, J. concurring)
Factual and Procedural Background
This reference under section 66(1) was made at the instance of the assessee, the firm Dawjee Dadabhoy & Co., which sought registration under section 26A for the period 1 January 1953 to 1 July 1953 and was denied such registration.
The firm originally operated under a written partnership deed dated 14 November 1949 (eight partners). Clause 2 of that deed regulated retirement (only on 30 June or 31 December with notice) and Clause 3 required periodic accounts. In 1953 two partners (Esoof and Abdul Hamid) retired and a new partner (Ghulam Hossain) joined. A document styled "supplementary deed of partnership" dated 2 July 1953 was executed by six continuing partners and the new partner.
The supplementary deed contained recitals that Esoof and Abdul Hamid should be "considered to have retired with effect from 31 December 1952" and that Ghulam Hossain would be admitted "as and from 1 January 1953." The supplementary deed also contained an operative clause stating the parties agreed to carry on the business on the same terms as the 1949 deed.
The firm applied for registration under section 26A but the Income-tax Officer and the Appellate Assistant Commissioner refused registration. The Income-tax Tribunal rejected the assessee's appeal, holding there was no proper distribution of profits in accordance with the supplementary deed dated 2 July 1953 and that the firm was entitled to registration only with effect from 2 July 1953 because there was no partnership deed in operation from 1 January 1953 to 1 July 1953.
The assessee asked the Tribunal to admit two documents (dated 31 December 1952 and 1 January 1953) allegedly recording the retirement and the agreement that seven partners would carry on the business from 1 January 1953 pending execution of a new instrument. The Tribunal declined to admit those documents and gave reasons, including that the recitals and operative portion of the supplementary deed were inconsistent with the existence of such prior documents.
Legal Issues Presented
- Whether, on the facts and in the circumstances of the case, the assessee was entitled to registration under section 26A for the period from 1 January 1953 to 1 July 1953 (the period before the supplementary deed of 2 July 1953).
- Whether a partnership can be treated for registration purposes as having been constituted from a date anterior to the execution of the written instrument (i.e., whether an oral agreement or later-written instrument can validate registration for an earlier accounting period), within the framework of section 26A, the Partnership Act and the Income-tax Rules.
- Whether the specific documents the assessee sought to produce (dated 31 December 1952 and 1 January 1953) established that a partnership agreement and actual carrying on of business by the seven persons subsisted from 1 January 1953 to 1 July 1953.
Arguments of the Parties
Assessee's Arguments
- The assessee contended that two documents existed: one dated 31 December 1952 recording the retirement of Esoof and Abdul Hamid with effect from that date, and another dated 1 January 1953 executed by the six continuing partners and the new partner stating the seven would carry on the business from 1 January 1953 pending a formal instrument.
- It was argued that under the rules framed under the Indian Income-tax Act a body of persons could agree that the partnership business should be taken to have commenced from a date anterior to the formal agreement, and that prior decisions supported registration where the partnership was genuine even if the instrument was executed after the start of the relevant year.
- The assessee relied upon the wording in the specimen application form (paragraph 3) where profits "will be divided or credited" to suggest the form contemplated recognition of allocations for periods prior to execution of the written instrument.
Revenue / Tribunal's Position
- The Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal refused registration on the ground that there was no partnership deed or instrument operative between 1 January 1953 and 1 July 1953 and that proper profit distribution in accordance with the deed dated 2 July 1953 did not exist for that earlier period.
- The Tribunal declined to admit the two documents tendered by the assessee and gave reasons: the recitals and operative portion of the supplementary deed of 2 July 1953 were inconsistent with the alleged earlier instruments; the supplementary deed indicated the new constitution and agreement to carry on the business were arrived at at the time of execution (thereby excluding the possibility of an agreement taking effect prior to 2 July 1953).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| R.C. Mitter & Sons v. Commissioner of Income-tax [1959] 36 I.T.R. 194 (S.C.) | Interpretation of "constituted under an instrument of partnership" in section 26A — held "constituted" does not necessarily mean "created" and an oral partnership later reduced to writing may qualify; also the majority held that unless the partnership business was carried on in accordance with the terms of an instrument operative during the accounting year, it cannot be registered for the following assessment year. | The court relied on this decision to explain the meaning of "constituted" and to frame the limits of registration: while an oral agreement later reduced to writing can found registration, registration cannot be granted unless the partnership business was carried on in accordance with terms of an instrument operative during the accounting year (and the Supreme Court had not decided whether the document must exist at the very inception of the accounting year). |
| Haridas Premji v. Commissioner of Income-Tax, Bengal (reported in text without full citation) | Support for the proposition that a partnership can be created by correspondence or oral agreement and later recorded in writing; illustration of when an oral agreement may suffice for section 26A purposes. | The court cited it to show that partnerships may be constituted by correspondence or oral agreement and that registration can follow from the date of such an agreement if satisfactorily established to the Income-tax Officer. |
| Dwarkadas Khetan & Co. v. Commissioner of Income-tax [1956] 29 I.T.R. 903 (Bombay High Court) | Consideration of a partnership deed that purported to deem the partnership to have commenced earlier than the execution date; discussion that registration relates to the firm as carried on in fact rather than strictly to the instrument's execution date. | The court accepted parts of the Bombay High Court's observation that registration concerns the firm and whether it was carrying on business during the accounting period, but qualified that a subsequent formal execution must still comply with the time limits prescribed by the rules. |
| Commissioner of Income-tax v. Dwarkadas Khetan & Co. (Supreme Court) | Mentioned in connection with the Bombay High Court decision; Supreme Court did not decide the date-from-which issue because it disposed of the appeal on another ground. | The opinion notes that the Supreme Court did not reach a conclusion on the precise question whether a deed could be treated as operative from an earlier date in that case, limiting the precedential value on that point. |
| K. Acharya v. Commissioner of Income-tax (Orissa High Court) | Held, on its facts, that registration should not be refused if the partnership was genuine and instrument was drawn up after commencement of the year; relied on departmental instructions favouring registration where partnership is genuine. | The court observed this line of authority but distinguished it from the present case on the facts; it concluded the Orissa case did not help the assessee because there the deed of rectification cured the defect, whereas here the material did not establish a prior agreement or carrying on of business by the seven persons for the period in question. |
| N.T. Patel & Co. v. Commissioner of Income-tax (cited briefly) | Mentioned as a case in contrast to the Orissa decision on entitlement to registration for a particular year. | Referenced only to note there was conflicting authority on aspects of timing of registration; no detailed application was made because the opinion did not elaborate this decision's reasoning further. |
Court's Reasoning and Analysis
The court's analysis proceeded in a series of discrete legal and factual steps, applying statutory provisions, rules and prior authorities to the material before it:
- Statutory and definitional starting point: the court noted that under the Income-tax Act the attributes of "firm", "partners" and "partnership" are the same as under the Partnership Act and quoted section 4 of the Partnership Act to emphasize that partnership requires an agreement by persons to carry on business together. From this the court stated the legal proposition that a partnership business can only date from the moment the parties agree to unite; partners cannot unilaterally extend the life of a partnership by declaring it to have existed from an earlier date.
- Examination of the instruments and evidence: the court carefully examined the deed of partnership of 14 November 1949 and the supplementary deed of 2 July 1953, including relevant recitals. The recitals in the supplementary deed were analyzed and the court concluded they were inconsistent with the existence of the documents the assessee sought to produce (the documents dated 31 December 1952 and 1 January 1953). The court summarized three specific reasons for this inconsistency: (a) the recitals were inconsistent with any desire of the two partners to retire before July 1953; (b) the wording that the retiring partners should "be considered to have retired with effect from 31 December 1952" indicated an agreed deemed date rather than an actual earlier retirement; (c) the admission of the new partner was coeval with the execution of the supplementary deed.
- Effect of the operative clause: the operative part of the supplementary deed showed the agreement to carry on under the new constitution was arrived at at the time of execution of the document on 2 July 1953, which excluded the possibility of having the new partnership operate from an earlier date (1 January 1953) on the material before the court.
- Statutory provisions and rules: the court set out section 26A of the Income-tax Act and the Income-tax Rules made under section 59 (including time-limits and formalities in Rule 2 and the specimen form in Rule 3). The court observed that the rules impose time-limits and formalities and that the specimen form requires the "date of admittance to partnership" to be given, indicating that allegation of an earlier admission must be supported by evidence.
- Interaction with authorities: the court considered authority (R.C. Mitter & Sons) which clarified that "constituted" does not necessarily mean created only by a written instrument and that an oral partnership later reduced to writing may be registered. But the court also emphasized the majority's holding that registration requires the partnership business to have been carried on in accordance with the terms of an instrument operative during the accounting year relevant to the assessment year. The court therefore framed the permissible scope: while oral agreements may be recognized if proved, registration depends on satisfactory establishment to the Income-tax Officer and compliance with rules and prescribed time-limits.
- Application to present facts: the court said that if it had been shown to the income-tax authorities and the Tribunal that the seven persons had in fact entered an agreement and carried on business together from 1 January 1953 to 1 July 1953, the court would have answered in favour of the assessee. However, on the material before it (including the contents of the supplementary deed and the failure to produce or have admitted the alleged earlier documents), the court concluded the necessary proof was lacking.
- Procedural evidentiary point: the Tribunal's refusal to entertain or admit the two documents was explained by the court as consistent with the content of the supplementary deed and with the absence of any mention of such documents in that deed; the supplementary deed's recitals and operative clause contradicted the existence or effect of the earlier documents the assessee relied upon.
Holding and Implications
Holding: The reference question — whether on the facts and in the circumstances of the case the assessee was entitled to registration for the period from 1 January 1953 to 1 July 1953 — is answered in the negative.
Direct consequences and implications:
- The assessee is not entitled to registration under section 26A for the period 1 January 1953 to 1 July 1953.
- The assessee must pay the costs of the reference (as ordered by the court).
- The decision is fact-specific: the court emphasized that registration could be permitted where an oral agreement predating the written instrument is satisfactorily proved, but on the material before it such proof was absent. The opinion therefore resolves the dispute on the facts before the tribunal rather than laying down a broader new rule that would permit backdating of partnership existence in all cases.
Note: The opinion does not assert that it is establishing a new general precedent beyond its factual conclusion; it confines its result to the lack of evidence that the partnership was constituted and carrying on business in the relevant earlier period.
G.K Mitter, J.:— This reference under section 66(1) of the Act is at the instance of the assessee, a firm which was denied registration under section 26A for the period January 1, 1953, to July 1, 1953.
2. Dawjee Dadabhoy & Co. was a firm composed of eight partners under a written agreement of November 14, 1949. There was a change in the constitution of the partnership in the year 1953, when two of the partners retired and a new partner was taken in this was recorded in writing by a document styled “supplementary deed of partnership” bearing date July 2, 1953, executed by six out of eight partners who did not retire and the new partner who was taken in. As the rights of the parties are regulated by these two documents it is necessary to note the relevant provisions thereof. The following are the relevant clauses of the deed of 1949:
“Clause 2:— The partnership business shall be carried on as long as the senior partners or a majority of them so desire provided that if any partner shall be desirous of retiring from the partnership at any time during the continuance of the partnership he shall be at liberty to do so only on the 30th day of June or the 31st day of December in any calendar year, and only on giving at least two months' previous notice in writing ending with the 30th day of June or the 31st day of December, as the case may be, to the managing partners and immediately after the 30th date of June or the 31st day of December, as the case may be, the partner giving such notice shall cease to be a partner and subject thereto the business of the partnership shall be continued by the remaining partners.
Clause 3:— At the end of every year, that is to say, on the 31st day of December (or at the end of every period of six months, namely, on the 30th day of June and the 31st day of December if the partners or a majority of them so decide) a general account and balance-sheet shall be made by the partners who shall be at the head-office of the firm and also at each branch of the firm of all sales, purchases, receipts, etc., during the preceding year or six months as the case may be.”
3. The partners who retired were Esoof and Abdul Hamid and the new partner was one Ghulam Hossain.
4. The recitals in the supplementary indenture are as follows:
“Whereas the said Esoof and Abdul Hamid both desire to retire from the said partnership. Whereas it is provided in clause 2 of the deed of partnership dated November 14, 1949, that a partner shall be at liberty to retire only on the 30th day of June or the 31st day of December in any calendar year.
Whereas by mutual agreement of all concerned it is deemed expedient that Esoof and Abdul Hamid shall both be considered to have retired with effect from December 31, 1952.
Whereas the remaining parties of the partnership formed by the deed of partnership dated November 14, 1949, have agreed to take in and admit as a new partner in the said partnership business the party, viz., Gulam Hossain, as and from January 1, 1953.
Whereas the parties have agreed to carry on the business on the same terms and conditions, stipulations as laid down in the deed of partnership dated November 14, 1949, and they hereby agree, accept and abide by all the articles numbered 1 to 40 as set out therein and whereas all the parties hereto including the newly admitted partner have agreed (as they hereby do) to admit and acknowledge correctness of the accounts and balance-sheet of the partnership business up to and including the 31st day of December, 1952, and each of them hereby agree not to raise any objection to the accounts or as to correctness thereof or about any matter connected with the said business prior to January 1, 1953.”
5. The operative portion of the supplementary deed shows that in pursuance of the above, the parties agreed to carry on the said business in the Union of India of the firm of Dawjee Dadabhoy & Co., under the supplementary deed of partnership, upon the same terms and conditions, stipulations, as are set out in the deed of partnership dated November 14, 1949.
6. The firm applied for registration under section 26A which was refused by the Income-tax Officer and the Appellate Assistant Commissioner. The Tribunal also rejected the appeal of the assessee holding that there was no proper distribution of profits in accordance with the deed dated July 2, 1953. The Tribunal further held that the firm was only entitled to registration with effect from the last-mentioned date, there being no partnership deed in operation from January 1, 1953, to July 1, 1953.
7. It appears that before the Tribunal the assessee prayed for production of two documents, viz., one dated December 31, 1952, and the other dated January 1, 1953. It is claimed that by the first of these documents the retirement of two partners with effect from December 31, 1952, was recorded and by the latter executed by the six continuing partners and the new partner it was provided that these seven partners would carry on the business of the firm with effect from January 1, 1953, and that a new instrument of partnership would be drawn up as quickly as possible and until execution of such an instrument the partnership would be covered by the agreement dated January 1, 1953.
8. The Tribunal declined to entertain or admit these documents at the hearing before it. If these documents were in existence the recitals in the supplementary deed are wholly inexplicable. Not only is there no mention of any document of the kind which the assessee wanted to place before the Tribunal, but the supplementary deed of partnership goes against the execution of any such document for the following reasons:
“(a) The first recital in the supplementary document is inconsistent with the desire of Esoof and Abdul Hamid to retire from the partnership before Jury, 1953.
(b) In view of the term in the deed of partnership of 1949 that a partner could only retire on the 30th day of June or the 31st day of December in any calendar year the parties concerned thought it ‘expedient that Esoof and Abdul Hamid should be considered to have retired with effect from December 31, 1952’. In plain words it means that although no retirement had actually taken place on December 31, 1952, the agreement was that their retirement should be taken to have occurred on that date.
(c) The fourth recital shows that the remaining partners' agreement to take in and admit Gulam Hossain as a new partner was coeval with the supplementary deed.”
9. The operative portion of the supplementary deed shows that the agreement to carry on the business of the partnership under the new constitution was arrived at at the time of the execution of the document and excludes the possibility of the parties having agreed to constitute the new partnership on a date prior to July 2, 1953.
10. Section 26A provides as follows:
“26A. (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”.
11. Formerly there was some difference of opinion as to whether “constituted under an instrument of partnership” in sub-section (1) meant “created by a deed of partnership”. That has now been set at rest by the decision of the Supreme Court in R.C Mitter & Sons v. Commissioner of Income-tax [1959] 36 I.T.R 194 S.C., holding that the word “constituted” did not necessarily mean. “created” or “set up” but it might also mean “given legal or official form or shape”and that an application for registration under section 26A might be made not only by a firm which came into existence as from the date of a written agreement but also one created by word of mouth but subsequently clothed in legal form by reduction of the terms and conditions of the partnership to writing. By a majority the Supreme Court further held that “unless the partnership business was carried on in accordance with the terms of an instrument of partnership, which was operative during the accounting year, it cannot be registered in respect of the following assessment year.” But at the same time the court made it clear that they were “not concerned with the further question whether the document should be in existence at the very inception of the accounting year, or before the year is out.”
12. In the case before us the accounting year ended on December 31, 1953, the assessment year being 1954-55. We are not concerned with the question whether registration under section 26A could be had for the whole of the said accounting year as the reference is directed to the period of six months from January 1, 1953, to July 1, 1953, and our attention must be confined to that period only.
13. Under the Income-tax Act “firm”, “partners” and “partnership” have the same attributes as they have under the Partnership Act. Under section 4 of the Partnership Act “partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” In order, therefore, to constitute a partnership there must be an agreement to that effect by the several persons who want to unite for that purpose. Further, their agreement must be to carry on a business by all of them working together or by any of them acting for all. From this latter proposition it follows that the partnership business can only spring into existence after the partners have agreed to unite. It may be open to them to adopt a business already in existence and carried on by any or all of them or even one carried on by strangers to the partnership who sever their connection with the business as from the date on which the partnership takes it over. In any of these cases, however, the partnership business can only date from the moment the parties agree to unite. Although they can take over assets and liabilities of others in respect of a business carried on before the agreement of partnership is entered into, in the eye of law and specially income-tax law, the partnership business will be that carried on from the moment of the agreement. It is not open to the partners to extend the life of the partnership by saying that they will be considered to have been carrying on a business as from a date then past. The essence of partnership is an agreement to carry on business in partnership. It must necessarily follow that the life of the partnership cannot go beyond the date of this agreement.
14. It was, however, argued on behalf of the assessee that under the rules framed under the Indian Income-tax Act it was open to a body of persons to agree that the partnership business should be taken to have commenced from a date anterior to the agreement and that this proposition is supported by some decisions. Prima facie, this seems opposed to reason and common sense and we have, therefore, got to examine the rules and decisions to find out whether that is so.
15. The Indian Income-tax Rules were framed by the Board of Inland Revenue in exercise of the powers conferred by section 59 of the Indian Income-tax Act. Under section 59(1), “The Central Board of Revenue may, subject to the control of the Central Government, make rules for carrying out the purposes of this Act and for the ascertainment and determination of any class of income.” Under sub-section (5) of section 59 “rules made under this section shall be published in the Official Gazette and shall thereupon have effect as if enacted in this Act”. Rule 2 provides that “any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of section 26A of the Indian Income-tax Act, 1922,… register with the Income-tax Officer, the particulars contained in the said instrument on application made in this behalf”.
16. The rule further provides that “such application shall be signed by all the partners… personally, or in the case of a dissolved firm by all persons who were partners in the firm immediately before the dissolution and by the legal representative of any such partner who is deceased, and shall, for any year of assessment up to and including the assessment for the year ending on the 31st day of March, 1953, be made before the 28th February, 1953, and for any year of assessment subsequent thereto, be made—
(a) where the firm is not registered under the Indian Partnership Act, 1932 (IX of 1932), or where the deed of partnership is not registered under the Indian Registration Act, 1908 (XVI of 1908), and the application for registration is being made for the first time under the Act—
(i) within a period of six months of the constitution of the firm or before the end of the ‘previous year’ of the firm whichever is earlier, if the firm was constituted in that previous year;
(ii) before the end of the previous year in any other case;
(b) where the firm is registered under the Indian Partnership Act, 193 (IX of 1932), or where the deed of partnership is registered under the Indian Registration Act, 1908 (XVI of 1908), before the end of the previous year of the firm, and
(c) where the application is for renewal of registration under rule 6 for any year, before the 30th day of June of that year:
Provided that the Income-tax Officer may entertain an application made after the expiry of the time-limit specified in this rule, if he is satisfied that the firm was prevented by sufficient cause from making the application within the specified time.”
17. Under rule 3 the application referred to in rule 2 has to be made in the form annexed to the rule. Under clause 3 of the specimen form of application it was open to the partners to say that the profits or loss, if any, of the previous year “will be divided or credited” as shown in Section B of the Schedule. From this it was argued that the form contemplated the partnership having been in existence long before the date of application as also before the execution of the deed of partnership. I do not think that the use of the words “will be divided or credited” in paragraph 3 of the specimen form has any such effect. It is no doubt open to the partners to enter into an oral agreement of partnership first and to have the same recorded in writing later on. The schedule to the form itself shows that the “date of admittance to partnership” of each partner has to be given. It would not be open to any partner to say that he had been admitted to the partnership before a date on which all the partners including himself agreed to enter into partnership.
18. A partnership like any other contract can be entered into by means of correspondence so long as the letters spell out a concluded bargain sufficient for the purpose of section 26A of the Indian Income-tax Act: Haridas Premji…Assessee; v. Commissioner Of Income-Tax, Bengal…Referring Officer. often, however, persons desiring to unite carry on oral negotiations which are then reduced to writing in the form of a deed of partnership. It may well happen that even when the parties have settled all the terms bjr which they are to be bound and have agreed to carry on business in pursuance thereof the drawing up of the formal document takes place some time afterwards. In such a case the partners may claim registration as from the date when they enter into the agreement to carry on the partnership orally and can have the firm registered under section 26A if the rules mentioned above are complied with but unless it is established to the satisfaction of the Income-tax Officer that there was an oral agreement which preceded the formal document the Income-tax Officer can only go by the document.
19. In Dwarkadas Khetan & Co. v. Commissioner of Income-tax [1956] 29 I.T.R 903., an instrument of partnership was executed by four persons on March 27, 1946. Clause 3 of the deed of partnership recorded that “the partnership shall be deemed to have commenced from January 1, 1946, and shall continue until the partners hereto decide unanimously in writing to terminate the same.”
20. One of the partners who also executed this document was a minor. The learned judges of the Bombay High Court held, inter alia, that the instrument created a valid partnership between the three adult partners, the minor having been admitted to the benefits of the partnership. This was upset by the Supreme Court, the judgment being reported as Commissioner of Income-tax v. Dwarkadas Khetan & Co. With regard to the date from which registration was to have effect the learned judges of the Bombay High Court held that it should be “not by reason of the date of the instrument but in point of act. If it came into existence on January 1, 1946, then it should be registered from that date. If it came into existence at a later date, then from such date.” The learned judges did not hold that the registration should have effect from January 1, 1946, in terms of clause (3) of the deed of partnership. The Supreme Court however did not come to any finding on this question as in their opinion the answer to the first question was sufficient to dispose of the appeal. In delivering the judgment of the Bombay High Court, Chagla C.J observed: “What must not be overlooked is that what is sought to be registered is not the instrument of partnership but the firm, and the firm is seeking registration for the purpose of certain indulgence which is shown to a registered firm and if the firm can satisfy the authorities that it was carrying on business during the accounting period, then the fact that the partnership deed was executed subsequently can have no bearing on the question of registration.” With respect, I agree with the first part of the observation but the second part must be subject to the qualification that the execution of the deed must not be beyond the period prescribed under the rules.
21. Reliance was placed by the learned advocate for the assessee on the case of K. Acharya v. Commissioner of Income-tax. In this case one A who was carrying on business as the sole proprietor of it took in some of his employees as partners and had a deed of partnership drawn up on December 27, 1945, to record the said fact. One of these persons described as partners was Rabindra Nath Prodhan, a minor. The shares of the partners were specified in the document. Subsequently, on July 25, 1951, the same persons including the minor purported to execute another deed of partherr ship. By yet another document dated February 28, 1952, described as a deed of rectification of the deed of partnership dated July 25, 1951, it was declared by the four major partners that Rabindra Nath Prodhan was only “a minor admitted to the benefits of the partnership till he attains majority.” An application was then made for registration of the partnership business. The Income-tax Officer rejected it on the ground that the minor had not merely been admitted to the benefits of partnership. The Income-tax Tribunal upheld this order. One of the questions framed for decision by the court was whether, on the facts and in the circumstances of the case, registration under section 26A should have been granted to the firm as constituted by the deed dated July 25, 1951, and the deed of rectification dated February 28, 1952, for any one or more of the assessment years 1951-52, 1952-53 and 1953-54. The Orissa High Court held that the Tribunal had failed to consider the effect of the deed of rectification. It found that the assessee could not claim registration for the year 1951-52 as the Appellate Assistant Commissioner had found that the partnership was created only, from July 25, 1951, several months after the expiry of the financial year 1955. On the view that the partnership came into existence on July 25, 1951, the court held that the assessee was entitled to registration for the year 1952-53 as the instrument of partnership had been in existence in the accounting year in respect of which the assessment was being made. This conclusion was based on this reading of the judgment of the Supreme Court in R.C Mitter v. Commissioner of Income-tax. The court also relied on the departmental instructions issued by the Central Board of Revenue which indicated that “so long as the partnership was genuine, registration should not be refused merely on the ground that the instrument of partnership was drawn up after the commencement of the year.” The court also held that the firm was entitled to registration for the year 1953-54. So far as registrartion for the assessment year 1952-53 is concerned the judgment seems to be against the decision of the Supreme Court in N.T Patel & Co. v. Commis sioner of Income-tax.
22. I do not see how these judgments help the assessee before us. So far as the Orissa case is concerned if the deed of rectification dated February 28, 1952, cured the defect in the deed of partnership dated July 25, 1951, as held by the High Court, there was a partnership constituted under the deed. The court treated the firm as having been in existence from the commence ment of the year previous to the assessment year 1952-53.
23. In the present case if it had been shown before the income-tax authorities including the Tribunal that the seven persons had entered into an agreement of partnership and carried on business together as a firm from. January 1, 1953, to July 1, 1953, we would have answered the question in favour of the assessee. But unfortunately on the material before us we cannot possibly take that view.
24. In the result the question framed: “Whether on the facts and in the circumstances of the case the assessee was entitled to registration for the period from January 1, 1953, to July 1, 1953?” Must be answered in the negative. The assessee must pay the costs of this reference.
Ray, J.:— I agree.
25. Question answered in the negative.
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