Rankin, C.J:— In this case, it appears that there is a certain firm and that firm has three partners. It is apparently a shop and it has been going on in the name of Haridas Premji. The question is with regard to the assessment of income-tax for the year of assessment 1928-1929. There is no dispute between the income-tax authorities and the assessees as to the amount of the profits or gain; but the assessees were minded to claim to be taxed as a registered firm. Accordingly, they in time filed an application in the prescribed form to be registered on the basis of certain letters passed between the three partners. It appears that the two junior partners were intended to be working partners and that the capital was to belong entirely to the senior partner and the profits were to be divided 7 annas to the senior partner Ramji Premji, 5 annas to Haridas Gokuldas and 4 annas to Tulsidas Nanji. The letters' which the two junior partners addressed to the senior partner set out the shares and set out certain other stipulations. The letters which the senior partner addressed to the junior partners were simply this:
“I agree to give you 5/4 annas share for working as long as you work in my shop No. 71, Cross Street which is carried on in the name of Haridas Premji and in this share I shall not raise any objection.”
2. Now, the income tax officer and the Assistant Commissioner refused to register these documents upon the ground that they were letters and multiplicity of documents and not an instrument of partnership as required by sub-S. (14), S. 2 of the Act. That point of view is conceded by the learned Advocate-General to be erroneous and it was not upheld when the matter was taken before the Commissioner of Income-tax. The reason however why the Commissioner of Income-tax has thought that he cannot accept these documents for registration under the Act is that the reply of the senior partner does not purport to accept all the terms proposed by the junior partners.
3. It accepts the term as regards the amount of the shares of the profits but it is silent as to a number of the matters that were proposed in the letters addressed to the senior by the juniors. That being so, no doubt there does arise a question of some difficulty because one then has to inquire whether something which did not purport itself to be an agreement was in fact an agreement by reason that the acting of the parties had contributed assent to the documents which do not appear by themselves to have been consented to.
4. It appears to us that the reasonable course, in which the learned Advocate-General concurs, is this that either the junior partners should write another letter saying that the other conditions proposed by their letters to the senior partners are waived, or that the senior partner should write another letter to the junior partners saying that the other terms and conditions proposed by them are accepted by him. We are of opinion that is the proper course which should be adopted in this case; and it will be understood in view of the fact that the point taken by the income-tax officer and the Assistant Commissioner is really a different point, that this Court is of opinion that the application when amended by the addition of this further document is to be treated as the same, application and as made in good time on the date on which the original application was made. Our intention is that it should govern this particular assessment. That being so, our answer to the question:
“whether the documents produced by your petitioners constitute an instrument of partnership under Section 2(14) of the Income-tax Act”
will be in this form. In our opinion, this question does not at the present stage arise because, in view of the position adopted by the income-tax officer and the Assistant Commissioner, the assessees should be allowed to file an additional letter clearing up the ambiguity noticed by the Commissioner of Income-tax in the case stated before us. There will be no order as to costs in this reference.
C.C Ghose, J.:— I agree.
Patterson, J.:— I agree.
K.N/R.K
5. Order accordingly.
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