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TMI Blog1965 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax authorities on the ground that there was no instrument of partnership ? 2. The question arises out of the proceedings relating to the assessment of the assessee for the assessment year 1950-51, for which the relevant accounting year was the year ended on 31st December, 1949. The business of the assessee was of exporting raw wool, produced in Rajasthan, to England and America. It also owned a factory for ginning and pressing wool, an ice factory and a flour mill at a place in the erstwhile Indian State of Palanpur. The States in which the assessee was carrying on its business merged in the Indian Union, and from the 1st of August, 1949, the Indian Income-tax Act, 1922, became applicable to the area. For the purpose of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced before him was an alleged draft of the partnership deed which was said to have been written up late in 1949. The assessee's case was that Mohanbhai Devjibhai, one of the partners, had gone to Pakistan and was unable to return to India for reasons of health. When the Indian Income Tax Act became applicable in August, 1949, the partners wanted to have a deed of partnership executed. A draft was accordingly prepared which was taken by the other partner, Dave, to Pakistan, where it was shown to Mohanbhai Devjibhai, and was approved of by him. It was also agreed to between the partners that the regular deed of partnership should be executed in India on the return to India of Mohanbhai. Mohanbhai, however, could not return to India a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been agreed to by the parties to the writ proceedings was also produced. The date on which these consent terms appear to have been agreed upon was 21st November, 1951, and were to the effect that all properties including lands, buildings, structures, machinery and plant, acquired or brought or bought with the capital property by the evacuee for the partnership were to be deemed his exclusive property and all such property bought or acquired with the profits accrued during the partnership was to be deemed the partnership property in which Dave was to have eight annas share. It was contended on behalf of the assessee that the draft deed of partnership along with other documents formed an instrument constituting a partnership and specifyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... glish Dictionary gives the meaning in law of the word instrument as a formal legal document whereby a right is created or confirmed or a fact recorded; a formal writing of any kind, as an agreement, deed, charter or record, drawn up and executed in technical form. The Indian Stamp Act, section 2(14), defines an instrument as including every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded. The word instrument , therefore, as used in section 26A of the Indian Income Tax Act will mean a document of a legal nature, by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded. The alleged draft which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the relevant account year is the draft and that by itself cannot show that it is the instrument of partnership of certain specified individuals, namely, Mohanbhai and Dave. Under section 26A, the instrument has to be an instrument not of any partnership, but of the partnership of certain specified individuals. A mere record of some terms of partnership will not make the document an instrument of partnership of certain specified individuals. On the argument advanced by Mr. Mehta, what may make it not the document itself but the document coupled with certain other evidence. Under section 26A, however, it must be the document itself which must constitute the instrument of partnership. In our opinion, therefore, the draft of the partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X
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