LAXMI TRADING COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred for our opinion is :

(2.) THE statement of the case submitted by the Tribunal shows that the assessee commenced business on December 1, 1952, as a partnership and an instrument of partnership was executed. THE application for registration of the firm under section 26A of the Income-tax Act was presented on November 17, 1953, in respective of the assessment year 1954-55 for which the previous year was the 1st December, 1952, to 30th November, 1953.

(3.) AS urged by learned counsel for the department, it may be that the failure to enter the shares of the remaining partners in the losses may entail some inconvenience and possible difficulty in calculating their shares in losses. In fact, learned counsel went a step further and urged that it may not be possible to calculate at all the shares of the remaining partners in the losses; but we fail to see any force in this submission because shares in profits and losses are not to be calculated on the basis of the entries in this application; their proportion can be determined in accordance with the terms of the deed of partnership. No deed of partnership has been held to be invalid merely because shares in profits are specified of all the partners including those admitted merely to the benefits of the partnership, and there is no separate specification of shares of the remaining partners who are to share losses indicating their separate shares in the losses. Further, the Rules and the form do not say that there should be any such calculation made by the assessee and entered in this form of application. May be that this is an omission in the form, but it can be cured by suitably amending the form. While the form stands as it is, we cannot say that there is any defect in filing it, if the shares of losses only are not entered., where one or more of the partners sharing the profits does not share losses and the letter P is entered against his name in accordance with Note 2. In the present case, it is true that the letter P was not entered against the names of the two partners who were to share in profits only and not in losses, but the actual application form shows that, against their names, a bracketed line was drawn and a note was made that these partners had been admitted to the benefits of the partnership. This note clearly served the purpose of indicating exactly what the idea of the letter P in column 6 would have indicated. In fact the note made by the assessees was an effort to show that these partners were sharing profits which could have been shown by the letter P in accordance with Note 2. In substance, therefore, the entries actually made complied with the requirements of Note 2 and consequently we disagree with the Tribunal that there was any defect in filling up the form in this respect.