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TMI Blog1972 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... partners was called the party of the first part, and Muralidhar was called the party of the second part. The party of the first part was entitled to a share of 75 paise and the party of the second part to a share of 25 paise in the partnership. In the books of the assessee-firm the 75 paise share in the profits of the assessee-firm for the accounting year relevant to the assessment year 1961-62 was credited in the name of Arjandas Co. In the application for registration made under section 26A of the Income-tax Act, 1922 (hereinafter called " the Act "), and the Rules framed thereunder in the column relating to the share of profits in the Schedule, the combined share of the three individual partners constituting Arjandas Co. was given as 75 paise, but with a note that it has to be credited and distributed between the partners of Arjandas Co. in the ratio mentioned in the deed of partnership of Arjandas Co. The assessee filed the application under section 26A for registration of the firm for the assessment year 1961-62 along with the deed of partnership dated January 15, 1960, of the assessee-firm and also the partnership deed of Arjandas Co. The Income-tax Officer refuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ami Chettiar v. Commissioner of Income-tax and V. M. Periasamy Chettiar Co. v. Commissioner of Income-tax are no longer good law in view of two later judgments of the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income-tax and Parekh Wadilal Jivanbhai v. Commissioner of Income-tax. It is necessary to set out the statutory provisions in respect of the registration of the firm. Section 26A of the Act reads 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 all 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. " Rule 3 of the Income-tax Rules, 1922, required that the application shall be made in the form annexed therein and shall be accompanied by the original inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed did not refer to the profit sharing ratio of the four individuals who had signed the instrument of partnership but referred only to the shares of the two firms and stated that they should have equal shares in the profits. The learned counsel for the assessee contended in that case that the share of each individual partner can easily be verified by reference to the instrument of partnership relating to the two firms, that it was permissible to look into those documents for the ascertainment of the shares and that therefore the refusal of registration of the firm was improper. A Division Bench of this court held : " An application for registration under section 26A cannot be maintained unless there is an instrument of partnership and that specifies the share of each partner. The language of the statue is so plain that there is no scope for any misinterpretation. There can be no specification of the shares in the instrument unless the shares are set out and do find a place on the face of the instrument. The partnership law presumes equality of shares in the absence of a contract to the contrary (vide section 13 of the Partnership Act). An omission in the deed of partnership to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned judges who decided the case in A. S. S. R. Guruswami Chettiar v. Commissioner of Income-tax. The correctness of the decision in A.S.S.R. Guruswami Chettiar v. Commissioner of Income-tax was questioned before the same judges in another case in V. M. Periasamy Chettiar v. Commissioner of Income-tax and in this connection reliance was placed on the decision in N. T. Patel Co. v. Commissioner of Income-tax, which was a decision of the Supreme Court. The learned judges affirmed their earlier view and did not think that there were any grounds for revising their earlier opinion. Being two Bench judgments of this court, we are bound to follow those decisions unless the Supreme Court has taken a different view. It is, therefore, necessary to consider whether the ratio of the decisions of the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income-tax and Parekh Wadilal Jivanbhai v. Commissioner of Income-tax in any way conflict with or impliedly overrule the decisions of this court and make the law laid down in A.S.S.R. Guruswami Chettiar v. Commissioner of Income-tax as no longer good law. The facts in Parekh Wadilal Jivanbhai v. Commissioner of Income-tax were these : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm. This view of the Supreme Court is directly against the view of this court in A.S.S.R. Guruswami Chettiar v. Commissioner of Income-tax, where it was held that section 13 of the Partnership Act could not be invoked for the purpose of ascertaining the shares of the partners. After referring to the particulars given in the application for registration the Supreme Court also referred to the entries in the account books of the assessee-firm and held that, while reading the partnership deed as a whole and in the context of the relevant circumstances of the case, one would find that there was specification of the individual shares of the partners in the profits within the meaning of section 26A of the Act. The Supreme Court also held that, although the application for registration of a firm under section 26A had strictly to be in conformity with the Act and the Rules, in ascertaining whether the application was in conformity with the Rules, the deed of partnership had to be reasonably construed. If, therefore, the principle of the decision in A.S.S.R. Guruswami C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income-tax. We are also not able to subscribe to the view that a reference to the plurality of documents for ascertainment of the shares is neither contemplated or permitted under section 26A. The learned judges who decided A.S.S.R. Guruswami Chettiar v. Commissioner of Income-tax, and V. M. Periasamy Chettiar Co. v. Commissioner of Income-tax were willing to hold that if there were amending or supplementary documents between the same parties to the partnership deed, such amending or supplementary documents could be looked into for ascertainment of the shares of the partners when the original instrument of partnership itself did not contain the specific shares of the individual partners. If the instrument of partnership itself did not specify the terms, how do you refer to the amending or supplementary deeds ? The answer given is that both form part of the same instrument. But the learned judges were not willing to refer to the partnership deed among a few only of the partners in order to ascertain the individual shares of those partners, if at least there is no reference to that deed in the deed which comes for registration. They were of the view that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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