Research › Browse › Judgment

Kerala High Court · body

1993 DIGILAW 42 (KER)

Balakrishnan Nair v. CAIT

1993-01-21

JAGANNADHA RAO, PARIPOORNAN, USHA

body1993
Judgment :- 1. T.R. No.49/82 and I.T.R.Nos.10 & 11 of 1987 are coming up for consideration of the Full Bench in view of separate orders of reference by two Benches of this Court. The issue involved in the above cases relates to the question of registration of firms under the Agricultural Income-tax Act, 1950 and The Income-tax Act, 1961. The provisions regarding registration of firms under the above mentioned statutes and the rules issued thereunder are substantially similar. While I.T.R. 49/82 relates to a reference under S.60(2) of the Agricultural Income-tax Act, 1950, I.T.R.Nos.10 & 11 of 1987 relate to a reference under S.256(1) of the Income-tax Act, 1961. 2. Detailed reference order is in I.T.R. 49/82. The learned judges of the Bench doubted whether an earlier Bench decision of this Court in Commissioner of Income-tax, Kerala v. Ithappiri & George, 1972 KLT 137 = (1973) 88 ITR 332) and the decisions following the same, taking the view that the individual shares of partners in losses also should be specified in the partnership deed, to enable registration under S.184 of the Income-tax Act, would apply even in cases where minors arc not admitted to the benefits of partnership and there are indications to show that the partners are to share equally. It was also felt that the matter requires reconsideration in the light of later decisions of the Supreme Court in Mandyala Govindu & Co. v. Commissioner of Income-tax, A.P., (1976) 102 ITR 1, and the Full Bench decision of the Andhra Pradesh High Court in Commissioner of Income-tax, A.P. v. Krishna Mining Co., (1980) 122 ITR 362. We make it clear that we are not concerned in this case as to what will happen, if in a particular case, minors are admitted to the benefits of partnership and the individual losses of the partners are not specified in the partnership deed. We leave that aspect open. Relevant facts: 3. I.T.R. 49/1982 is at the instance of an assessee under the Agricultural Income Tax Act, 1950, which is a firm constituted by an instrument of partnership dated 6-1-1959. Registration was granted to the firm under S.27 of the Agricultural Income Tax Act read with R.2 of Agricultural Income Tax Rules, 1951 and it was being assessed as a registered firm. I.T.R. 49/1982 is at the instance of an assessee under the Agricultural Income Tax Act, 1950, which is a firm constituted by an instrument of partnership dated 6-1-1959. Registration was granted to the firm under S.27 of the Agricultural Income Tax Act read with R.2 of Agricultural Income Tax Rules, 1951 and it was being assessed as a registered firm. For the assessment years 1961-62,1962-63 and 1963-64, even though the Commissioner of Agricultural Income Tax initiated proceedings to cancel the registration for the reason that there was no stipulation of individual shares of the partners in the partnership deed, it was finally dropped on being convinced, that there were materials available, to show that the partners had equal shares. Upto the year 1965-66 assessments were completed assigning the status of a registered firm. Renewal of registration had been granted even for the subsequent years upto 1975-76 and assessments completed on that basis. For the year 1965-66 proceedings were again initiated to cancel the renewal of registration already granted and by order dated 20-4-81, the Deputy Commissioner of Agricultural Income Tax took the view that the firm was not entitled to registration since individual shares of the partners were not specified in the deed. The above order is subject matter of I.T.R. 586/85. 4. The Commissioner of Agricultural Income Tax issued notice dated 2-5-1980 proposing to withdraw the renewal of registration granted for the years 1969-70 to 1975-76 on the allegation that the individual shares of the partners were not specified in the deed of partnership dated 6-1-1959 and therefore the instrument of partnership would not conform to the requirements envisaged under S.27 of the Agricultural Income Tax Act. While objecting to the above proposal the assessee contended that individual shares of the partners of the firm were clearly specified in the partnership deed dated 6-1-1959 and that the above question was considered in detail by the Commissioner of Agricultural Income Tax, Thiruvananthapuram in his order dated 3-3-1969 and it was held that the instrument of partnership specified the individual shares of the partners. The assessee placed strong reliance on the decisions of the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income Tax (56 ITR 219) and Parekh Wadilal Jiwanbhai v. Commissioner of Income Tax (1967) 63 ITR 485. The assessee placed strong reliance on the decisions of the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income Tax (56 ITR 219) and Parekh Wadilal Jiwanbhai v. Commissioner of Income Tax (1967) 63 ITR 485. It was contended that the clause relating to division among the partners in the Partnership Deed dated 6-1-1959 stipulated that net profit shall be divided among the partners and the division was to be made in equal shares. It was also submitted that the books of account would reflect division in the above manner. Reliance was placed on the provisions contained in S.13(b) of the Indian Partnership Act, 1932. It was contended by the assessee that in the absence of a different profit sharing ratio stipulated in the Partnership Deed, the partners shall share the profit/loss equally. 5. Rejecting the objections raised by the assessee the Commissioner of Agricultural Income Tax held in his order dated 6-8-1981 that the order passed in the revision petitions for the years 1961-62,1962-63 and 1963-64 was not binding for other assessment years, that there was no mention regarding the capital allotted to each partner though there is a stipulation that the net profit should be divided among the partners and that as specification of shares in the partnership deed is a condition precedent in granting registration and for allowing the application for renewal of registration, the registration and renewal granted to the assessee were wrong. It was further held that facts of the case relied on by the assessee were entirely different and therefore those decisions were of no help to the assessee, that in order to ascertain the shares of the partners it was not open to refer to extraneous evidence, that the provisions in S.13 of Partnership Act would apply only to profit and loss, and not to the capital and therefore the defect of failure to refer to the share of the capital in the deed cannot be rectified. By taking recourse to the decisions of the Supreme Court in M/s. R.C. Mitter & Sons v. I.T. Commissioner of Income Tax, AIR 1959 SC 868 and N. T. Patel & Co. v. I.T. Commissioner, AIR 1961 SC 1356, it was held that non-specification of share of the partners in the firm disqualified it for registration under S.27 of the Agricultural Income Tax Act. v. I.T. Commissioner, AIR 1961 SC 1356, it was held that non-specification of share of the partners in the firm disqualified it for registration under S.27 of the Agricultural Income Tax Act. The renewal of registration granted for the year 1975-76 was withdrawn and the assessing authority was directed to modify the assessment order assigning the assessee, the status of unregistered firm. Similar view was taken by the Deputy Commissioner of Agricultural Income-tax and Sales-tax for the assessment years 1969-70 to 1974-75 under proceedings dated 20-7-1981 which is subject matter of I.T.R.No.4 of 1986. 6. At the instance of the assessee in I.T.R.No. 49 of 1982 which relates to the assessment year 1975-76, the following question is referred: "On the facts and in the circumstances of the case, whether the Commissioner of Agricultural Income Tax is justified in holding that the firm was not entitled to get registration or renewal of registration under S.27 of the Agricultural Income Tax Act, 1950." The assessee had filed original petition No.1453/82-B before this Court for compelling the Commissioner of Agricultural Income-tax to refer all the three questions sought to be referred by the assessee for the year 1975-76. Pursuant to the judgment of this Court in the above original petition dt. 8-3-1985, the Commissioner of Agricultural Income-tax referred all the three questions in I.T.R.No.40/86. Question No.1 in I.T.R.No.40/86 is the same as the sole question referred in I.T.R.No.49/92. In I.T.R.No.586/85 relating to the assessment year 1965-66 and in I.T.R. 4/86 relating to the assessment years 1969-70 to 1974-75, all the three questions referred in I.T.R. 40/ 86 are referred. Since the reference order of the Bench covers only one question, namely, the sole question referred in I.T.R. 49/82 which is same as question No. 1 in the other I.T.Rs., it is only that question which is being considered in this judgment. 7. I.T.R.Nos. 10 and 11/1987 are at the instance of an assessee under Income Tax Act, 1961. They relate to the assessment years 1978-79 and 1979-80. The assessee firm consisting of two partners was formed under a Partnership Deed dated 28-2-1977 with effect from 1-1-1977 in the name and style 'Kerala Publicity Bureau'. While the Head Office of the partnership was at Ernakulam, it had a Branch Office at Kottayam also. 8. They relate to the assessment years 1978-79 and 1979-80. The assessee firm consisting of two partners was formed under a Partnership Deed dated 28-2-1977 with effect from 1-1-1977 in the name and style 'Kerala Publicity Bureau'. While the Head Office of the partnership was at Ernakulam, it had a Branch Office at Kottayam also. 8. Clause.10 of the instrument of Partnership provided that the net profit of the firm after usual business out going, shall be shared by the two partners. The whole of the profit of Ernakulam office was set apart to Sri. Kuriakose, one of the partners and the whole of the profit of Kottayam branch to the other partner Sri. Philipose. It is the above partnership deed which is relevant for the assessment year 1978-79. Later the two partners executed a fresh partnership deed dated 20-11-1978 which was to take effect from 1-1-1978. The above partnership deed which is relevant for the assessment year 1979-80 refers to a branch office at Calicut and provision for opening branches at other places. Clause.11 of the deed provided for the manner in which profits were to be shared by the partners. While Sri.Kuriakose was entitled to the whole of the profit of the Ernakulam Office and Sri. Philipose to the profit from Kottayam office, it was further provided that profit/loss of any branch or branches of the firm situate outside Ernakulam and Kottayam shall be shared by Sri.Kuriakose and Sri.Philipose in the ratio of 55% and 45% respectively. 9. The assessee was directed to show cause why registration should not be refused in the absence of specific mention in the partnership deed of profit and loss to be apportioned among the partners. It was contended on behalf of the assessee, for the year 1978-79 that their intention at the time of forming the partnership was to share the profit, by allotting 100% profit of the Ernakulam Office to Sri.Kuriakose, 100% profit of the Kottayam office to Sri. Philipose and to share the loss on the same basis. Two affidavits signed by the partners were also submitted to the above effect. For the assessment year 1979-80 the objection raised was that the partnership deed dated 20-11-78 did not specify as to how the losses are to absorbed in respect of the business done at Ernakulam and Kottayam Offices. Philipose and to share the loss on the same basis. Two affidavits signed by the partners were also submitted to the above effect. For the assessment year 1979-80 the objection raised was that the partnership deed dated 20-11-78 did not specify as to how the losses are to absorbed in respect of the business done at Ernakulam and Kottayam Offices. The Income Tax Officer passed orders dated 23-7-80 and 6-2-82 under S.185(1)(b) of the Income Tax Act refusing registration to the firm under S.184 of the Income Tax Act, 1961. The finding of the Income Tax Officer was affirmed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The Tribunal following the decisions of this court in United Hardwares v. C.I. T. Kerala (96 ITR 348), C.I.T. v. Ithappiri George (1972 KLT 137 = 88 ITR 332) and CIT v. Best Automobiles (117 ITR 877), took the view that in order to be eligible for registration under S.184 of the Income Tax Act, there must be a specification of shares in the loss as well, in the instrument of partnership and on this view it was held that the assessee was not entitled to registration. At the instance of the assessee the following question is referred in I.T.R. 10 and 11 of 1987. "Whether on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee firm is not entitled to registration?" Relevant provisions of Law 10. The relevant provision regarding registration of a firm under Agricultural Income Tax Act, 1950 reads as follows: "Section 27. Procedure hi registration of firms: (1) Application may be made to the Agricultural 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 purpose of this Act and on any other enactment for the time being in force relating to agricultural income-tax or super-tax. Procedure hi registration of firms: (1) Application may be made to the Agricultural 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 purpose of this Act and on any other enactment for the time being in force relating to agricultural income-tax or super-tax. (2) The application shall be made by such person or persons and at such times and shall 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 Agricultural Income-tax Officer in such manner as may be prescribed." Detailed provisions are made under R.2 to R.6 of the Agricultural Income Tax R.1951 regarding the form and the manner in which the application for registration has to be made. 11. As far as the registration under Income Tax Act, 1961 is concerned, detailed provisions are made under S.184 and 185. The relevant portion of S.184 for the purpose of this case read as follows: "184. Application for registration. (1) An application for registration of a firm for the purpose of this Act may be made to the Assessing Officer on behalf of any firm if (i) the partnership is evidenced by an instrument; and (ii) the individual shares of the partners are specified in that instrument. The relevant portion of S.185 read as follows: "185. Procedure on receipt of application: (1) On receipt of an application for the registration of a firm, the Assessing Officer shall inquire into the genuineness of the firm and its constitution as specified in the instrument of partnership, and - (a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order in writing registering the firm for the assessment year; (b) if he is not so satisfied, he shall pass an order in writing refusing to register the firm. Definition of 'Partnership' under S.4 of the Partnership Act is as follows: "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all." Section 13 (b) of the Partnership Act reads as follows: "13. Mutual rights and liabilities. Definition of 'Partnership' under S.4 of the Partnership Act is as follows: "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all." Section 13 (b) of the Partnership Act reads as follows: "13. Mutual rights and liabilities. Subject to contract between the partners (b) the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm;" Contentions: 12. Arguments were addressed by learned counsel Sri. Jose Joseph on behalf of the applicant in ITR 49/1982, by learned counsel Sri. Premjith Nagendran on behalf of the applicant in ITR 586/1985, 4/1986 and 40/1986, and Sri. T. Karunakaran Nambiar, learned Special Government Pleader (Taxes) represented the respondents. In ITR 10 & 11 of 1987 learned counsel Sri. P. Raman appeared on behalf of the applicant and the standing counsel, Government of India (Taxes) Sri.P.K.R.. Menon represented the respondents. 13. The main contention raised on behalf of the applicants is that specification of the individual shares of the partners required under S.27 of the Agricultural Income Tax Act, 1950 and S.184 of the Income Tax Act, 1961 does not contemplate expressly setting out in fractional or other shares. If there is no provision in the partnership deed indicating a contra-intention it should be taken that the partners are entitled to share the profit equally by applying the provisions contained under S.13 of the Partnership Act. It is also to be presumed that the partners are to bear the losses in proportion to the share of their profit. Further submission is that for the purpose of ascertaining the individual shares of the partners, it is competent to refer to and rely on materials other than the recital in the deed such as the accounts of the partnership and other connected documents. 14. It is contended on behalf of the applicants in I.T.Rs. 49/82, 586/85, 4/86 and 40/86 that specification of the individual shares of the partners in the capital is not a requirement at all under S.27 of the Agricultural Income Tax Act, 1951. Therefore the view taken by the Commissioner that the firm is not entitled to registration in the absence of specification of the individual shares of the partners in the capital is erroneous. Therefore the view taken by the Commissioner that the firm is not entitled to registration in the absence of specification of the individual shares of the partners in the capital is erroneous. The relevant portion of the partnership deed to be construed in I.T.R. 49/82 and connected cases read as follows: Para.1. Whereas we felt that it is essential to make an agreement containing future administration and procedures regarding the property called Padannaparambu the boundaries and measurement of which are described in the schedule below, which was jointly obtained by utilising the funds of each of us and possessed by us with the entire rights such as Ottikkanam for Rs. 31,000. Kuzhikkanam, interest on mortgage amount, simple kanam etc. thereon from Kunnummal Appa Nair, Azhikode Amsom and Desom as per the registered deed No. 1449 of the Sub Registry, Valapattanam on the 26th day of August, 1953; and therefore this agreement happened to be executed." "Para.6. It is also hereby decided that an account of the net income after deducting the entire expenses for supervising and collection of proceeds, cost of maintenance, tax payment etc. should be prepared on the 31st day of March in the respective year and rendered to the remaining shareholders before the 30th day of April and assign the share of each person in the account or to disburse to each sharer the amount due to him then and there and obtain receipts thereof." 15. The above would show that the partners had jointly acquired the property under a registered deed No. 1449 of 1953 dt. 26-8-1953. Reference is made to the above document in the proceedings of the Commissioner of Agrl. Income-tax dt. 3-3-1969 (Ext.A6) while finding that the registration granted to the firm for the assessment years 1961-62,1962-63 and 1963-64 were in order. It was pointed out on behalf of the applicants that the above mentioned sale deed and the accounts of M/s. Rajeswari Weaving Mills, Azheekode, where the partners had shares, would show that they had contributed equally towards the purchase price of the property. It was based on the above material and an affidavit filed by the Advocate on behalf of the firm regarding the payment of balance consideration in equal shares of the partners, the Commissioner of Agrl. Income-tax came to the conclusion in Ext.A6 that the shares of the partners were equal. It was based on the above material and an affidavit filed by the Advocate on behalf of the firm regarding the payment of balance consideration in equal shares of the partners, the Commissioner of Agrl. Income-tax came to the conclusion in Ext.A6 that the shares of the partners were equal. It is therefore contended that there is no justification for taking a different view for the subsequent years. The applicants submit that there is nothing in the recitals in the partnership deed, relevant portion of which is quoted above, which would go to show that the partners are not entitled to share equally. No minor is admitted to the benefits of the partnership. Therefore, according to the applicants, it is a case where the presumption under S.13(b) of the Partnership Act can be drawn in their favour and they should be treated as sharing the profits earned equally and contributing equally to the losses sustained by the firm. 16. Reliance was placed by the applicants in support of their contention on the decisions of the Supreme Court in Kylasa Sarabhaiah v. Commissioner of Income-tax, 56 ITR 219, Parekh Wadilal Jiranbhai v. Commissioner of Income-tax, 63 ITR 485, Commissioner of Income-tax v. Bhagyalakshmi & Company, 55 ITR 660 and Mandyala Govinda & Company v. CIT 102 ITR 1. They also relied on a decision of this Court in T. V. Mathew & Sons v. Commissioner of Income-tax 108 ITR 47 and the decisions of the Andhra Pradesh High Court in Adappally Nageswara Rao & Company v. Commissioner of Income-tax, 79ITR306, Commissioner of Income-tax v. Hindustan Stone Deport & Ors. 109 ITR 686 and Commissioner of Income-tax v. Krishna Mining Company, 122 ITR 362. The learned counsel appearing on behalf of the applicants sought to distinguish the decision in N.T. Patel & Co. v. Commissioner of Income-tax, 42 ITR 224 and R.C. Mitter & Sons, Calcutta v. Commr, of Income-tax, AIR 1959 SC 868, relied on by the Commissioner of Agrl. Income-tax for the reason that the facts of those cases are entirely different from the present case. 17. Learned counsel appearing on behalf of the applicants in ITR Nos. 10 and 11 of 1987 also put forward similar contentions and relied on the same decisions in support of his contention. The relevant portion of the partnership deed dt. Income-tax for the reason that the facts of those cases are entirely different from the present case. 17. Learned counsel appearing on behalf of the applicants in ITR Nos. 10 and 11 of 1987 also put forward similar contentions and relied on the same decisions in support of his contention. The relevant portion of the partnership deed dt. 28-2-1977 (Annexure-C1) to be considered for the assessment year 1978-79 reads as follows: "4. The Head Office of this firm shall be at Ernakulam and Branch Office at Kottayam and this firm may open any branches at any other place or places as may be decided upon by the partners from time to time xx 9. The initial capital of the firm shall be a sum of Rs. 1,25,000/- (Rupees one lakh twenty five thousand only), Rs. 65,000/- (Rupees sixty five thousand only) contributed by Sri. T.O. Kuriakose, party of the first part and Rs.60,000/- (Rupees sixty thousand only) contributed by Sri.T.O. Philip, party of the second part. 10. The net profit of the firm after the usual business outgoing shall be shared by the partners as follows: (a) Sri.T.O. Kuriakose, party of the first shall be entitled for the whole of the profits of Ernakulam office. (b) Sri.T.O. Philip the party of the second part shall be entitled for whole of the profits of Kottayam office." 18. The relevant portion of the partnership deed dt. 20-11-1978 (Annexure-C2) to be considered in the assessment year 1979-'80 reads as follows: "4. The Head Office of this firm shall be at Ernakulam and Branch offices at Kottayam and Calicut and this firm may open any branch or branches at any other places as may be decided upon by the partners from time to time. xx 10. The initial capital of the firm shall be a sum of Rs. 1,25,000/- (Rupees one lakh twenty five thousand only). Rs.65,000/- (Rupees sixty five thousand only) contributed by Sri.T.O. Kuriakose, party of the first part and Rs.60,000/- (Rupees sixty thousand only) contributed by Sri.T.O. Philipose, party of the second part. 11. The net profit of the firm after the usual business outgoings, shall be shared by the partners as follows: (a) Sri.T.O. Kuriakose, party of the first part shall be entitled for the whole of the profit of Ernakulam office. 11. The net profit of the firm after the usual business outgoings, shall be shared by the partners as follows: (a) Sri.T.O. Kuriakose, party of the first part shall be entitled for the whole of the profit of Ernakulam office. (b) Sri.T.O. Philipose, party of the second part shall be entitled for whole of the profits of Kottayam office. (c) Profits or losses of any branch or branches of the firm situated outside Ernakulam and Kottayam shall be shared by Sri.T.O. Kuriakose, party of the. first part and Sri.T.O. Philipose, party of the second part in the ratio of 55% and 45% respectively. 19. It is contended on behalf of the applicants in the light of the above provisions, it should be assumed that losses are also to be contributed by the partners in the same ratio in which they are to share profits as provided in the deed. Absence of a specific reference to the share in the loss, therefore, shall not be a reason for refusing registration. Learned counsel appearing on behalf of the applicants in I.T.R. Nos. 10 and 11 of 1987 submits that the question referred has to be answered in the negative. 20. According to the learned Special Government Pleader (Taxes), who represented the respondents in ITR 49/82 and connected cases, in order to qualify for registration under S.27 of the Agricultural Income Tax Act, the partnership should contain an agreement to share profit and loss, there must be express specification regarding sharing of the profit and loss and that it is not permitted to take resort to either S.4 or S.13(b) of the Partnership Act to ascertain the individual shares of the partners in profit and loss. According to him, the terms of S.27 shall be strictly complied with since a registration under S.27 makes the firm entitled to certain advantages in the matter of assessment under the Agrl. Income-tax Act, 1950. Strong reliance was placed by him on the decision of the Supreme Court in 42 ITR 224 supra. He relied on the earlier decision of the Supreme Court in Rao Bahadur Ravulu Subba Rao & Ors. v. Commissioner of Income-tax, Madras, (1956) 30 ITR 163, where the Supreme Court had occasion to consider the claim for registration under S.26-A of the Income-tax Act, 1922. He submits that the Agrl. He relied on the earlier decision of the Supreme Court in Rao Bahadur Ravulu Subba Rao & Ors. v. Commissioner of Income-tax, Madras, (1956) 30 ITR 163, where the Supreme Court had occasion to consider the claim for registration under S.26-A of the Income-tax Act, 1922. He submits that the Agrl. Income-tax Act, 1950 and the Rules framed thereunder, should be treated as exhaustive in regard to the conditions under which registration can be granted under S.27 and it is not open to look into any other statute for the above purpose. The other decisions which were cited and relied on by the learned counsel are, K.D. Kamath and Co. v. Commissioner of Income-tax, Mysore, (1971) 82 ITR 680, Sri. Ramamohan Motor Service v. CIT, A.P. (1973) 89 ITR 274 and Mandyald Govinda & Co. v. Commissioner of Income-tax, A.P., (1976) 102 ITR 1. It is submitted that the decisions of this Court in Commissioner of Income-tax, Kerala v. Ithappirai & George 1972 KLT 137 = (1973) 88 ITR 332 and 96 ITR 348 supra laid down the correct law and therefore do not require reconsideration. 21. Learned standing counsel, Government of India (Taxes), who appeared on behalf of the respondent in I.T.R.Nos.10 and 11 of 1987 also took the stand that specific reference to the individual share of loss of the partners in the partnership deed is mandatory for getting registration under S.184 of the Income-tax Act, 1961. According to him, it is not open to the authorities under the Act to look into the provisions of statutes other than the Income-tax Act and the Rules made thereunder and materials outside the recitals of the partnership deed, to ascertain whether the firm is entitled to registration. It is true that the terms 'firm', ' partner' and 'partnership' have been defined under S.2(23) of the Income-tax Act, 1961 as having a meaning respectively assigned to them in the Indian Partnership Act, 1932. But, since S.2 starts with the words, "unless the context otherwise requires", according to learned counsel, reliance cannot be made on the provisions contained under S.13(b) of the Partnership Act to ascertain the share of loss of the partners even though the firm sought to be registered under S.184 is a partnership as defined under the Indian Partnership Act, 1932. But, since S.2 starts with the words, "unless the context otherwise requires", according to learned counsel, reliance cannot be made on the provisions contained under S.13(b) of the Partnership Act to ascertain the share of loss of the partners even though the firm sought to be registered under S.184 is a partnership as defined under the Indian Partnership Act, 1932. Requirement of an instrument under S.184(1)(i) of the Income-tax Act, 1961 is a deviation from the provisions of the Indian Partnership Act under which a partnership can be formed even under an oral agreement. 22. The learned counsel further proceeds to submit that the insistence of a specification of the shares in profit and loss in the instrument as per the provisions contained under S.184(1)(ii) is also to be treated as a provision derogatory to the provisions of S.13 of the Partnership Act. He attempts to draw support from the decision of the Supreme Court in Commissioner of Income-tax v. Bhagyalakshmi & Co., 55 ITR 660. According to learned counsel, the decision of the Supreme Court in (1976) 102 ITR 1 supra, would support his contention that the share of the individual partners in the loss should be specifically mentioned in the deed of partnership. 23. Referring to proposition No.9, namely, "where there is provision for sharing the profits only but no losses, such firm also is not entitled for registration", learned counsel submits that the Full Bench decision of the Andhra Pradesh High Court in Commissioner of Income-tax, A.P. v. Krishna Mining Co., (1980) 122 ITR 362 would also support his contention. Consideration 24. The main issue arising in these cases is the interpretation of S.27(2) of the Agrl. Income-tax Act, 1961. Whether these provisions make it essential that the shares of individual partners in the loss sustained by the firm shall be specifically delineated in the instrument of partnership even in cases where no minor is admitted to the benefits of the partnership so as to make the firm entitled to seek registration, is the question to be considered. 25. Admittedly, there is conflict in the views taken by the different High Courts. This court had followed the view that there should be specific reference in the instrument of partnership to the shares of individual partners in the loss of the firm. 25. Admittedly, there is conflict in the views taken by the different High Courts. This court had followed the view that there should be specific reference in the instrument of partnership to the shares of individual partners in the loss of the firm. How far the above view taken relying on certain observations in the earlier decisions of the Supreme Court, is in accord with the later decisions of the Supreme Court and what is the total effect of the decisions of the Supreme Court, considered as a whole is the matter to be examined. 26. C.T. Palu & Sons v. Commissioner of Income-tax, Kerala, (1969) 72 ITR 641 is the earliest judgment of this Court cited at the Bar on the issue in question. One ground on which application for continuation of the registration of the firm under the Income-tax Act, 1961 was declined was, while the partnership deed as modified by a clarification deed showed that the profit shall be shared in the ratio of 50:25:25 between the two partners and the minor who was admitted to the benefit of the partnership and it was specifically made clear that the minor was not to bear any portion of the loss, there was no provision in the deed which would specify how and by whom the 25% of the loss shall be borne. The above finding of the Appellate Tribunal was upheld by the High Court. The assessee contended that, if the shares of the partners in the profit of the business are specified in the deed of partnership, it is not necessary to specify the shares in the loss, as the law provides that in the absence of a contract to the contrary, the loss shall be borne in the same proportion as the profit. A Bench of this Court held that even if the contention taken by the assessee is accepted as a general principle, as per the terms of the partnership deed modified by clarification deed, the major partners can be treated as liable to bear loss at the rate of 50% and 25% in proportion to their share in the profit and the general principle would not be helpful to find out how the balance 25% of loss is to be shared between the two major partners. 27. 27. In 1972 KLT 137 = (1973) 88 ITR 332 supra, there was no minor admitted to the benefits of the partnership. There were four major partners and it was provided that the net profit of the business after adjustments, shall be divided among the partners in the ratio of 30:30:20:20. There was no provision in the partnership deed about the manner in which the loss of the firm, if any, should be shared by the partners. The question arose whether the partnership was entitled to registration under S.184 of the Income-tax Act, 1961. This Court held that in the absence of specific provision in the partnership deed regarding the proportion in which loss had to be shared between the partners, there was no compliance with the provisions on S.184 and therefore, the firm was not entitled to registration. After referring to the conflict of decisions between the High Courts of Allahabad, Mysore, Andhra Pradesh and Bombay on the one side and that of the High Court of Gujarat on the other, the Division Bench came to the above mentioned conclusion, relying on N.T. Patel's case. In the light of the provisions contained under S.182(2) of the Income-tax Act, it was observed that the assessing authorities have necessarily to determine the share of the loss of the individual partners of a registered firm so that the loss may be set off against the other income of the partners or carried forward and set off in accordance with the provisions of S.70 to 75 of the Income-tax Act, 1961. Therefore, the specification of the proportion in which loss is to be shared is as important as specification of the shares in profit. Even though reference was made to S.13(b) of the Indian Partnership Act, 1932, the Bench took the view that the expression' the individual shares of the partners' in S.184 should normally cover the profit and loss and there was no compelling reason to read down the expression and give it a limited meaning. The deed itself should contain the specification of profit and loss and any other provision of law including that of S.13(b) of the Indian Partnership Act, 1932 shall not be looked into for the purpose of ascertaining the proportion of loss. 28. In 96 ITR 348 supra, the firm was constituted of four partners who were to share the profit in the ratio of 40:35:25. 28. In 96 ITR 348 supra, the firm was constituted of four partners who were to share the profit in the ratio of 40:35:25. But, there was a specific provision in the deed that loss sustained by the partnership business will not be binding on the third partner. It was then provided that in matters regarding which no specific mention is made in the deed the provisions in the Indian Partnership Act, 1932 shall prevail with respect to the relationship between the partners and the firm and third parties. A Bench of this Court took the view that the partnership was not entitled to registration as the deed had failed to satisfy the mandatory condition under S.184 of the Income-tax Act, 1961. Reference was made to the Supreme Court decisions, 56 ITR 219 supra and 63 ITR 485 supra and i also to the provisions under S.13(b) of the Indian Partnership Act, 1932. Ultimately, the Bench came to the conclusion by applying the dictum laid down in N. T. Patel's case that specification of the individual shares of the partners in the loss being absent in the deed of partnership, registration was correctly declined by the income-tax authorities. It was further held that S.13(b) cannot have any application to the facts of the case. It was observed: "S.13 as such will apply only when the question arises how the losses are to be borne by all the partners of a firm. When the partnership deed had excluded the liability for loss of one partner, the section cannot apply. Secondly, it is fairly well established that when profits are to be shared in specified unequal proportions and in the absence of a contract regarding the contribution of losses, it must be presumed that the partners agreed to contribute to the losses in the same proportion as that in which they share the profits. In such cases, it is not S.13 that is applied. So, in the absence of an agreement regarding contribution towards losses between partners 1 and 2, they must be taken to have agreed is contribute to the losses in the same proportion, viz., 40:35. In such cases, it is not S.13 that is applied. So, in the absence of an agreement regarding contribution towards losses between partners 1 and 2, they must be taken to have agreed is contribute to the losses in the same proportion, viz., 40:35. In such cases, it is not S.13 that is applied." Ultimately, following (1973) 88 ITR 332, the Bench took the view that the question before it was not 'whether it can discern some principle or other for determining in what manner the loss should be borne by the two partners who are to take 40% and 30% profits but whether the partnership deed has specified the proportion of loss'. 29. The next decision of this Court is (1977) 108 ITR 47 supra. Even though, the question considered therein was whether the Agricultural Income-tax Officer was justified in refusing registration under S.27 of the Agrl. Income-tax Act to the assessee firm on the ground of the partnership deed was not genuine, there are certain general observations regarding the scope of S.27 of the Agrl. Income-tax Act, 1951, in the following manner "Now, turning to the "question for determining, we would like to make some general observations regarding the circumstances under which a firm can be registered. There must be an application in accordance with S.27 of the Act The formalities required by the section as well as the rules prescribed must be complied with. There must be an agreement to carry on a business by all or any of the partners acting for all. The agreement must provide for the sharing of profits. Even in cases where no specific provision is made in the partnership deed regarding the manner in which losses should be shared, S.13(1)) of the Indian Partnership Act, 1932 has provided that in the absence of a contract the partners are obliged to contribute equally to the losses. When these conditions are satisfied, registration must be granted unless for reasons the taxing authorities are able to come to the conclusion that the partnership deed does not indicate the real state of affairs...." It is relevant to note that one of the learned judges of the Bench who rendered the above judgment was party to the judgment in 1972 KLT 137 = (1973) 88 ITR 332 and 96 ITR 348. 30. 30. The latest decision of this Court, referred at the Bar is Commissioner of Income-tax, Kerala-II v. Best Automobiles, (1979) 117 ITR 877. In the above case, there were two minors admitted to the benefit of the partnership. The Bench referred two earlier decisions of this Court on this point, and the decisions of the Supreme Court, Sri. Ramamohan Motor Service v. CIT. (1973) 89 ITR 274 (SC), and Mandyala Govindu & Co. v. CIT (1976) 102 ITR 1 and also to the provisions of S.13(b) of the Partnership Act. Ultimately, the Bench took the view that it is not necessary to resolve the conflict of decisions as in its opinion, there was no specification of the shares of the loss of the two minors either expressly or impliedly and there was nothing on which the officer could be satisfied that the shares of the minors in the losses had been specified. 31. The above discussion shows that strong reliance was placed on N.T. Patel's case by the Benches of this Court in taking the view that specific reference to the individual shares of the partners in profit and loss of the firm shall be made in the partnership deed itself and it is not open to look into any material outside the partnership deed or to the provisions of any other statute to ascertain the individual shares of the partners. Therefore, it is necessary to examine the facts of N.T. Patel's case and the reasoning of the Supreme Court in detail. 32. A partnership constituted by a deed of partnership dt. 29-3-1954 applied for registration under S.26A of the Income-tax Act, 1922 for the assessment year 1955-56. In the course of the assessment proceedings, it was detected that there was no specific provision in the deed for the division of profits and losses and the partners executed a supplemental document on 17-9-1955 purporting to rectify the error adding thereby a new clause to the deed specifying the shares in which the profit and loss of the partnership should be apportioned. It is clear from the statement of facts that reference was made to sharing of profit or loss in Clause.9,11, 34 and 41(a) of the deed under certain contingencies. But, there was no recital at all regarding sharing of profit or loss in the normal course of business, much less a specification of the shares of the individual partners. It is clear from the statement of facts that reference was made to sharing of profit or loss in Clause.9,11, 34 and 41(a) of the deed under certain contingencies. But, there was no recital at all regarding sharing of profit or loss in the normal course of business, much less a specification of the shares of the individual partners. After referring to the different clauses in detail, the Supreme Court held as follows: "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 S.26A of the Act and as that was wanting, registration was rightly refused." How far the above finding entered under the particular facts and circumstance of the case can be applied in all cases where the individual share of the partners in the profit or loss has not been specified in the deed of partnership is the question to be examined. There may be partnership deeds where provision is made for sharing the profit and loss but the specific proportion of the individual share of the partners would not have been recited. In certain deeds, like the one in ITR Nos. 10 & 11 of 1987, there may be provision regarding sharing of profit with details of the proportion but no reference about the sharing of the loss. In yet another category, there will be provision for sharing profits specifying the individual shares of the partners and with no provision regarding sharing of loss as in the case of the partnership deed in ITR 49/82 and connected cases. Is it the rule that in all such cases registration shall be refused to the assessee firms? 33. In Kylasa Sarabhaiah v. CIT, Hyderabad, (1965) 56 ITR 219 (SC), interpretation of the word 'specify' under S.26A came up for consideration before a Bench of five judges, and it was held, 'the word 'specify' is used in S.26A and R.2 as meaning, mentioning, describing or defining in detail: it does not mean expressly setting out in fractional or other shares'. In Parekh Wadilal Jivanbhai v. CIT, Madhya Pradesh, Nagpur and Bhandara, (1967) 63 ITR 485 (SC) also Supreme Court refused to take a strict interpretation of the word 'specify' used in S.26A. In Parekh Wadilal Jivanbhai v. CIT, Madhya Pradesh, Nagpur and Bhandara, (1967) 63 ITR 485 (SC) also Supreme Court refused to take a strict interpretation of the word 'specify' used in S.26A. In Clause.3 of the partnership deed which came up for consideration, capital was allotted to each partner in equal. Clause (10) stated, "after meeting all expenses, interest and other charges, the resulting net profit or loss shall be ascertained and shall be divided amongst all partners." It was also noticed that in all the applications for registration by the assessee-firm under S.26A the three partners had been shown to share the profits of the partnership firm equally. Reference was also made to the books of accounts where the profits had been shown apportioned equally among the three partners of the firm. It was therefore held that reading the partnership as a whole and in the context of the relevant circumstances of the case, there was specification of the individual shares of the partners in the profits within the meaning of S.26A and the assessee-firm was entitled to registration. 34. Even though the decision in K.D. Kamath & Co. v. CIT, (1971) 82 ITR 680 (SC) was relied on by the Revenue, we find no consideration of the specific issue in the above decision. In Sri. Ramamohan Motor Service v. CIT (1973) 89 ITR 274 also the question which came up for consideration was entirely different. There, it was found that the deed was void in view of S.30 of the Partnership Act as one of the five partners was a minor and that the applications made for registration of the firm and for renewal of registration were defective being not in accordance with the Rules. It was therefore held that the firm was not entitled to registration. 35. No later decision of the Supreme Court which has dissented from the view taken in (1965) 56 ITR 219 or (1967) 63 ITR 485 was brought to our notice. Our attention is not invited to any decision of the Supreme Court where after considering the view taken in Patel's case, Kylasa Sarabhaiah's case and Parekh Wadilal 's case, the Supreme Court has chosen to affirm one view or the other. Our attention is not invited to any decision of the Supreme Court where after considering the view taken in Patel's case, Kylasa Sarabhaiah's case and Parekh Wadilal 's case, the Supreme Court has chosen to affirm one view or the other. In (1976) 102 ITR 1, the question whether it is essential for registration under S.26A of the Indian Income-tax Act, 1922 that the shares of the partners in the losses must be satisfied in the partnership deed was left open. We will come to a detail discussion of the above decision at a later stage. 36. Rao Bahadur Ravulu Subba Rao & Others v. CIT, Madras, (1956) 30 ITR 163 (SC) has been relied on in support of the contention that The Income-tax Act is a self-contained code and if the individual shares of the partners in the profit and loss of the firm are not discernible from the partnership deed itself, it is not open to look into the provisions of other statutes to ascertain the same. The question which arose for consideration in the above case was the eligibility of a firm for registration under S.26A of the Indian Income-tax Act, 1922 where the application was signed not by the partner in person but through his power of attorney holder. It was held that the intention of the provisions of the Act was that the firm should be given the benefit of S.23(5)(a) only if it was registered under S.26A in accordance with the conditions laid down in that Section and the Rules framed thereunder. As those Rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid. The contention raised by the assessee on the basis of the right under common law and S.2 of the Power of Attorneys Act, 1882 to be represented through an agent was not accepted. It was held that right to apply for the registration of a firm under S.26A was to be determined exclusively by reference to the prescriptions laid down therein. It would be repugnant to the character of such a right to add to the terms of S.26A by reference to other laws. 37. It was held that right to apply for the registration of a firm under S.26A was to be determined exclusively by reference to the prescriptions laid down therein. It would be repugnant to the character of such a right to add to the terms of S.26A by reference to other laws. 37. In CIT, Madras v. Bagyalakskmi & Co., (1965) 55 ITR 660 (SC)., it has been held that except where there is a specific provision of the Income-tax Act which derogates from any other statutory law or personal law, the provision will have to be considered in the light of the relevant branches of law. As mentioned earlier, this decision is relied on by both sides in support of their contentions. We find substantial force in the contention of the applicants that so long as no provision derogatory to the provisions contained under S.13(b) of the Partnership Act, is obtained in the Agrl. Income-tax Act, 1950 and Income-tax Act, 1961, those provisions could be looked into to ascertain the individual shares of the partners in the profit and loss of the firm. On the other hand, we find it difficult to accept the contention of the Revenue in ITR Nos. 10 & 11 of 1987 that the provisions contained in S.184(1)(ii) is derogatory to the provisions contained in S.13(b) of the Partnership Act and therefore S.13(b) cannot be made use of for ascertaining the individual shares of the partners especially in the light of the observations contained in (1976) 102 ITR 1 (SC). We also find no merit in the contention based on the words 'unless the context otherwise requires' in S.2 of the Income-tax Act, 1961 that S.13(b) cannot be resorted to even though S.2(23) defines the terms, "firm', 'partner' and 'partnership' as having a meaning respectively assigned to them in the Indian Partnership Act, 1932. 38. Now, we come to the latest of the decisions of the Supreme Court on the issue cited at the Bar-Mandyala Govindu & Co. v. C.I.T. (1976) 102 ITR 1. The instrument of partnership considered in the above case showed that the three partners and a minor admitted to the benefit of the partnership, held the shares in the ratio of 31%:23%:23%:23%. v. C.I.T. (1976) 102 ITR 1. The instrument of partnership considered in the above case showed that the three partners and a minor admitted to the benefit of the partnership, held the shares in the ratio of 31%:23%:23%:23%. While, there was provision in the deed that the profits of the partnership business shall be divided and enjoyed according to the shares as specified above, there was no clause in the instrument specifying the proportion in which the three adult partners were to share the losses if any. After having set out of the terms of the agreement, the instrument closed with Clause.9, which stated: "We (partners) are bound to act according to the above mentioned stipulations and also according to the provisions of the Indian Partnership Act...." The question that arose in the case was whether in the absence of a specific statement in the instrument as to the proportion in which the partners were to share the losses, the requirement of S.26A could be said to have been satisfied. It was contended by the assessee- firm that S.26A of the Indian Income-tax Act, 1922 did not require specification of the shares in losses in the instrument of partnership and it is sufficient if the proportion in which the losses are to be shared is otherwise ascertainable and that assuming the section did so require, C1.9 of the instrument specified that requirement. Reliance was placed on S.13(b) of the Partnership Act. 39. The Supreme Court, at the outset, rejected the contention of the assessee-firm that, if specific reference to individual shares of the partners in the loss of the firm in the deed of the partnership is mandatory, the requirement would be satisfied by making a reference to the provisions contained under S.13(b) of the Partnership Act. It was held that bringing in by implication S.13(b) from a general statement that the partners are to act in accordance with the Partnership Act, did not amount to specification of the partners' shares in the losses and instrument of partnership therefore fails to comply with S.26A of the Act were this a requirement of that section. 40. The Supreme Court referred to the different views expressed by High Courts on the question whether it is essential for registration under S.26A of the Act that the shares of partners in the losses must be specified in the partnership deed. 40. The Supreme Court referred to the different views expressed by High Courts on the question whether it is essential for registration under S.26A of the Act that the shares of partners in the losses must be specified in the partnership deed. In Sannappa & Sons v. CIT (1967) 66 ITR 27 (Mys.) the Mysore High Court and in Hiralal Jagannath Prasad v. CIT (1967) 66 ITR 293 the Allahabad High Court had taken the view that it is not essential. Gujarat High Court in Thacker and Co. v. CIT (1966) 61 ITR 540 took the view that shares and profits and losses have both to be specifically stated in the instrument of partnership in order to comply with the conditions laid down under S.26A to obtain registration and the above view was followed by Kerala High Court in C. T. Palu & Sons v. CIT (1969) 72 ITR 641 and CIT v. Ithappiri & George, 1972 KLT 137 = (1973) 88 ITR 332. After referring to the above decisions of the High Courts and pointing out the conflict of opinion, the Supreme Court held that for the purpose of the case before it, it was unnecessary to decide which view was correct, as, according to the Supreme Court, on the facts of the case, the appeal was bound to fail on any view. 41. But, the Supreme Court observed that it cannot be disputed that the income-tax officer, before allowing the application for registration must be in a position to ascertain the shares of the partners in the losses even if S.26A did not require the shares in the losses to be specified in the instrument of partnership. The argument put forward by the assessee that, in the light of the provisions contained u/s.13(b), it must be held that partners of the assessee firm were liable to share the losses equally, in the absence of a contrary indication was not accepted. It was observed that S.13(b) makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits. In the facts of the case shares of the partners were not equal. It was observed that S.13(b) makes the partners liable to contribute equally to the losses only when they are entitled to share equally in the profits. In the facts of the case shares of the partners were not equal. After referring to Jessel M.R. in In re Albion Life Assurance Society ((1880) 16 Ch.D. 83) "It is said, as a general proposition of law, that in ordinary mercantile partnerships where there is a community of profits in a definite proportion, the fair inference is that the losses are to be shared in the same proportion", it was held that since the partners were having unequal shares in the profits, there can be no presumption that losses are to be equally shared between them. Reference was also made to the decision of Ramesam, J. in Pitchiah Chettiar v. Subramanian Chettiar, (1935) ILR 58 Mad. 25. The above decision considered the scope of S.253(2) of the Indian Contract Act, 1872 which are reproduced in S.13(b) of the Indian Partnership Act, 1932 and it was held that two presumptions are clubbed in one sub-section. The first is, if no specific contract was proved shares of the partners must be presumed to be equal. Second presumption is that where the partners are to participate in the profits in certain shares, they should also participate in the losses in similar shares. Even though the section says that both should be in equal shares, it implies that if unequal shares are admitted by the partners as to profits that applies equally to losses. In the absence of a special agreement, this should be the presumption. In the facts of the case, the Supreme Court held that the first presumption cannot be applied as the shares and profits were unequal. Second presumption also could not be applied as it was found that even if the adult partners were to bear the losses in proportion to their respective shares in the profits, the amount of loss in the minors' share would still remain undistributed. There was no indication in the instrument of partnership as to whether the partners would bear the loss in minor's share equally or to the extent of their own individual shares. It was therefore held that the firm was not entitled to registration as there was no means of ascertaining how the losses were to be apportioned. 42. There was no indication in the instrument of partnership as to whether the partners would bear the loss in minor's share equally or to the extent of their own individual shares. It was therefore held that the firm was not entitled to registration as there was no means of ascertaining how the losses were to be apportioned. 42. It is relevant to note that no reference is made in the above judgment to N. T. Patel's case which has taken a definite view that shares of individual partners both in profit and loss of the firm shall be specified in the instrument of partnership. On the other hand, after noting the conflicting views of the High Courts the question was left open. A reading of the judgment would show that the decisions of Jessel M.R. and Ramesam, J. were quoted with approval but could not be applied to the case as there was a minor admitted to the benefits of the partnership and there was no indication as to how that portion of the loss was to be shared between the partners and the presumption under S.13(b) could not be invoked for that purpose. This decision does not endorse the view that under no circumstances, provisions of law-outside the Income-tax Act could be looked into for ascertaining the share of individual partners in the loss of the firm. 43. Number of decisions of different High Courts were referred and relied on by both sides. In (1967) 66 ITR 26 and in R.B. Angadi & Sons v. CIT, Mysore, (1969) 73 ITR 93, Mysore High Court took the view that specific reference in the partnership deed to the shares of individual partners in the loss of the firm is not a mandatory requirement for registration. The same view was taken by the Allahabad High Court in (1967) 66 ITR 293 supra. In A. Asha & Co. v. CIT Madras, (1973) 87 ITR 57, the Madras High Court took the view that it would be proper for the department to refer to a plurality of documents for ascertaining the profit sharing ratio of the partners and refusing to look into other deeds for such ascertainment where there is no dispute about the genuineness of the partnership would be hyper technicality with no substance. Similar view was taken by the Bombay High Court in CIT Bombay City v. Kolhia Hirtagarh Co. Similar view was taken by the Bombay High Court in CIT Bombay City v. Kolhia Hirtagarh Co. Ltd., Bombay (1949) 17 ITR 545. On the other hand, the Gujarat High Court has taken the view in (1966) 61 ITR 540 that the shares in the profit and loss have both to be specifically stated in the instrument of partnership in order to comply with the conditions laid down in S.26A of the Indian Income-tax Act, 1922 to obtain registration. 44. Commissioner of Income-tax, A.P. v. Krishna Mining Co., (1986) 122 ITR 362 is a decision of a Full Bench of the Andhra Pradesh High Court. Most of the important decisions on the issue, including the decision of the Supreme Court in Mandyala Govinda & Co. have been referred in the above case. It was held therein that the specification of the individual shares of the partners in the deed of partnership may be either express or implied or worked out. It is one of the intention or object of the partners who constituted the firm. The intention and object of the partners of the firm with regard to the specification of the individual shares of the partners can be gathered either from the recitals of the deed of partnership as a whole or from the proved facts and circumstances indicated in the application for registration, books of account and conduct of parties. Nine principles have been drawn up in the above judgment as emerging from the discussion. One among the above mentioned principles referred in the judgment is 'where there is provision for sharing profits only, but no losses such firm also is not entitled for registration'. The above observation has to be understood as reference to a case where there is specific provision not to share the loss. Otherwise, the statement would be contradictory to an earliest statement, namely, 'such deed of partnership must specify either expressly or by implication the individual shares of the partners, the intendment and object of the requirement of specification of the individual shares of the partners may be gathered on a reasonable and fair reading of whole document of partnership with the particulars furnished in the application". 45. 45. In the light of the decisions in Kylass Sarabhaiah and Parekh Wadilal of the Supreme Court, instructions were issued by the Department under letter No.26/12/67-IT (A II) dt.15-11-1967 to the effect that if reading the partnership deed in a reasonable manner indicates that the shares both in profits and in losses can be inferred from the deed, registration cannot be refused. Conclusions 46. In the light of the above discussions, we are inclined to take the view that where no minor is admitted to the benefits of the partnership, a firm cannot be refused registration either under S.27 of the Agricultural Income-tax Act, 1950 or under S.184 of the Income-tax Act, 1961 only on the ground that the shares of the individual partners in the loss of the firm have not been specifically mentioned in the instrument of partnership. In the absence of indications to the contra it should be taken that the partners have agreed to bear the loss in the same proportion in which they are to share the profit When shares of the individual partners are not actually worked out in the deed, it is open to ascertain the shares by reading the entire instrument as a whole and giving it a reasonable interpretation, by looking into the accounts and other documents of the firm which would show how the profit or loss had been actually apportioned between the partners and also by taking recourse to S.13(b) of the Indian Partnership Act, 1932. We therefore hold, with great respect to the learned judges, the decisions, CIT v. Ithappiri & George, 1972 KLT 137 = 88 ITR 332 and United Hardwares v. CIT 96 ITR 348 where a contrary view had been taken are not good law. We also hold that specification of the individual shares of the partners in the capital is not a requirement under S.27 of the Agrl. Income-tax Act, 1950. ITR Nos. 49/82,586/85 & 4 & 40 of 1986 47. Para.1 of the partnership deed refers to the investment made by the partners in the firm. It is seen from Ext.A6 proceedings of the Commissioner of Agrl. Income-tax dt. 3-3-1969 that sufficient materials were available with the department to show that the partners had contributed equally to the capital. Para.6 of the partnership deed states that the net income after deducting the entire expenses etc., should be shared between the partners. It is seen from Ext.A6 proceedings of the Commissioner of Agrl. Income-tax dt. 3-3-1969 that sufficient materials were available with the department to show that the partners had contributed equally to the capital. Para.6 of the partnership deed states that the net income after deducting the entire expenses etc., should be shared between the partners. In the absence of any indication to the contrary the partners should be taken to have agreed to share the profits equally and liable to contribute to the loss also equally. 48. We therefore answer the sole question referred in ITR 49/82 and the first question referred in ITR Nos. 586/85,4/86 and 40/86 in the negative, in favour of the assessee. ITR Nos. 10 & 11 of 1987 49. In annexure C1 partnership deed relevant for the assessment year 1978-79, Para.10 refers to the share of individual partners. It is stated that while Sri.T.O. Kuriakose, one of the two partners, shall be entitled to the whole of the profits of Ernakulam office, namely one of the two branches of the firm, the other partner, Sri.T.O. Philipose shall be entitled to the whole of the profits of Kottayam Office, namely the second branch of the firm. In the absence of a contra indication, it has to be taken that Sri.T.O. Kuriakose would bear the loss, if any, of the Ernakulam office and Sri. T.O. Philipose would be liable to contribute to the whole of the loss, if any, of the Kottayam Office. Annexure C2, the partnership deed relevant for the assessment year 1979-80 also gives similar indications regarding the individual shares of the partners in the profits of the two branches of the firm at Ernakulam and Kottayam. It is also stated that as far as other branches are concerned, the partners would share the profit and loss of the firm- in the ratio of 55 % and 45%. There is no indication in the deed that the two partners are to bear the loss of the two branches at Ernakulam and Kottayam otherwise than on the terms on which they were to share the profits of the two branches. On a reasonable and proper interpretation of the deed, it has to be held that there were sufficient materials before the authorities to arrive at the shares of individual partners in the loss of the firm. On a reasonable and proper interpretation of the deed, it has to be held that there were sufficient materials before the authorities to arrive at the shares of individual partners in the loss of the firm. Therefore, we answer the questions referred in ITR 10 and 11 of 1987 in the negative, in favour of the assessee. ITR Nos. 586/85,4/86 and 40/86 will be considered by the Division Bench for answering the remaining questions referred. A copy of this judgment under the seal of the High Court and the signature of the Registrar, shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.