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TMI Blog1971 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961, for the assessment year 1965-66 ? During the accounting period a partnership deed was entered into the a firm on March 22, 1965. The partnership deed is annexure " A ". The relevant paragraph of the partnership deed for the purpose of this case is paragraph 6, which is in these terms: " 6. The net profit of the business after adjustments shall be divided among the partners as shown below. 1 . M.O. Ithappiri 30 Np. in the rupee 2. T.V. George 30 Np. in the rupee 3. M.I. Leelamma 20 Np. in the rupee 4. M.I. John 20 Np. in the rupee There is no provision in the partnership deed about the manner in which the the losses of the firm, if any, should be borne by the parties. There is a provision in paragraph 10 which is in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts in Hiralal Jagannath, Prasad v. Commissioner of Income-tax, and in R. Sannappa and Sons v. Commissioner of Income-tax. Before us counsel for the assessee also invited our attention to an earlier decision of the Allahabad High Court in Laxmi Trading Company v. Commissioner of Income-tax, and the decision of the Mysore High Court in R.B. Angadi and Sons v. Commissioner of Income-tax, as also the decisions of the Andhra Pradesh High Court in Addepally Nageswara Rao and brothers v. Commissioner of Income-tax, and of the Bombay High Court in In re Parekh Wadilal Jiwanbhai. Counsel on behalf of the revenue mainly relied on the decisions of the Gujarat High Court in Thaker & Co. v. Commissioner of Income-tax , as well as the decision of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or losses. This was apparently an omission and a rectification was made after the relevant accounting period. Negativing the contention that this rectification deed would have the effect of supplying the lacuna in the partnership deed drawn up, the following observation was made by the Supreme Court after a detailed examination of clauses 9, 11, 34 and 41(a) of the partnership deed that was construed. " But, in none of these clauses is it stated what the shares of the partners in the profits and losses of the firm were to be and that in our opinion was requisite for registration of the partnership under section 26A of the Act and as that was wanting, registration was rightly refused." The use of the words " profits and losses " in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the assessing authorities will necessarily have to determine the share of the loss of every individual partner of a registered firm so that the loss may be set off against the other income of the partner or carried forward and set off in accordance with the provisions of sections 70 to 75 of the Income-tax Act, 1961. The specification of the proportion in which loss is to be shared, therefore, assumes an importance almost equal to that of the specification of the shares in the profit which is necessary for assessing the individual partners on their share of the income coupled with their other income. The question is not whether there is any rule of law discernible either from section 13(b) of the Indian Partnership Act, 1932, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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