1. The main dispute in this appeal, filed by the assessee, is regarding the assessee's claim of registration not only denied by the ITO but also by the AAC.2. The registration was refused mainly on the ground that profit sharing ratio of the partners was not specified in the partnership deed. The learned counsel for the assessee, Shri P.C. Jain, submitted that proforma partnership deed was actually received from the Government and it was copied as such. Even then, he submitted that in case clauses 6, 16 and 24 are gone through, it cannot be said that the profit sharing ratio is not specified. He also submitted that capital contribution by both the partners was absolutely equal and equal was the division of profit, as indicated by their respective capital accounts and the balance sheet filed before me, which were also before the two lower authorities. He mainly relied on the cases of Parekh Wadilal Jivanbhai v. CIT  63 ITR 485 (SC), CIT v. Krishna Mining Co.  122 ITR 362 (AP) (FB), Alankar Jewellers v. CIT  116 ITR 89 (Pat.) and Kylasa Sarabhaiah v. CIT  56 ITR 219 (SC), against which the learned departmental representative, beside relying on the orders of the two lower authorities, placed his reliance on the cases of Dastur Dadi & Co. v. CIT  49 ITR 554 (Bom.), A.S.S.R.Gumswami Chettiar v. CIT  48 ITR 692 (Mad.), and Rai Bahadur Jodha Mai Ghungar Mal v. CIT  53 ITR 655 (Punj.). He also submitted that as per the Punjab and Haryana High Court, a Full Bench decision in the case of Nandlal Sohanlal v. CIT  110 ITR 170, in income-tax matters we should not resort to the Indian Partnership Act, 1932, etc.
3. After taking into consideration the rival submissions and going through the documents and case law cited by the two parties, I am unable to confirm the action of the AAC. First of all, I reproduce herebelow relevant clauses of the partnership deed as under : 6. The said partnership shall distribute the net profit and bear the losses in proportion to their respective shares.
16. The profit or loss, as the case may be, shall be divided as mentioned in clause 6, after the signing of the accounts in the manner laid down in the preceding clause.
24. In respect of matters not mentioned herein the partnership shall be governed by the provisions of the Indian Partnership Act, 1932.
From the reading of the above three clauses, it is apparent that the two partners meant to have equal shares, which is apparent from Clause 24, given above, that 'in respect of matters not mentioned herein, the partnerships shall be governed by the provisions of the Indian Partnership Act, 1932'. Then conduct of the assessee as well by contributing absolutely equal capital which is in a sum of Rs. 18,860 by both the partners, Vinod Kumar and Pardeep Kumar, and division of profit in equal share ratio, i.e., Rs. 13,249,85 for each of the two partners, and filing of Form No. 11 indicating the profit sharing ratio, half and half, supports the contention of the assessee in toto.
In the case of Parekh Wadilal Jivanbhai (supra), their Lordships of the Supreme Court held that : ... reading the partnership deed 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 Section 26A and the firm was entitled to registration for 1953-54.
Regarding the abovesaid decision, the learned departmental representative submitted that it was under the Indian Income-tax Act, 1922 ('the 1922 Act'). But when I go through the comparative study of the 1922 Act and the Income-tax Act, 1961 ('the Act') specification of shares was warranted in the partnership deed under both the Acts. The above Supreme Court decision is applicable to the assessee's claim on all fours. The only difference is that in the Supreme Court decision, there was mention in the partnership deed that capital has to be equal.
It was so here by conduct. Coming to the case of Kris/ma Mining Co.
(supra), their Lordships of the Andhra Pradesh High Court observed as under : ...The word 'specify' has not been defined either in the Income-tax Act or in the Rules. So, the word 'specify' must be interpreted reasonably and fairly. In fact, Section 26A of the Indian Income-tax Act does not indicate that the specification of shares of the partners is for distribution of profits and losses. But that is normally implied. Having regard to this, the word 'specify' under Section 26A of the Indian Income-tax Act and Rule 2 means 'mentioning or describing or defining in detail' but does not mean 'expressly set out in fractional or other shares'.
Therefore, if the partnership deed specifies either expressly or by implication the shares of the individual partners in the firm, the firm is entitled to registration under the Income-tax Act. The intention and object of the partners of the firm in regard to specification of the shares can be culled out either from the recitals in the partnership deed as a whole or from the proved facts and circumstances indicated in the application for registration, books of account and the conduct of the partners.... (p. 363) Then, the case of Alankar Jewellers (supra) further supports the contention of the assessee as their Lordships of the Patna High Court observed that the 'application' includes documents which are required to the enclosed therewith and the partnership deed. It is also observed by their Lordships in the said case that : ...It is mandatory on the" part of the ITO to intimate the firm to rectify the defect in the application for grant of registration and an opportunity should be given to the firm to rectify such defect within one month from the date of such intimation.... (p. 89) No such defect was pointed out by the ITO. Then, in the instant case, it is specifically mentioned in Clause 24 of the partnership deed that the partnership shall be governed by the provisions of the Indian Partnership Act. Coming to the case of Kylasa Sarabhaiah (supra), what was held regarding specification of share, read as under : (v) that the word 'specifying' was used in Section 26A and Rule 2 of the Indian' Income-tax Rules, 1922, as meaning 'mentioning, describing or defining in detail, it did not mean expressly setting out in fractional or other shares; (p. 220) Reliance of the learned departmental representative on the case of Nandlal Sohanlal (supra) is misplaced. In the said case, it is mentioned that the Act should hold the field for the purpose of matters for which provisions are made therein and resort should be made to no other Act. But, in the instant case, I am not applying the Indian Partnership Act in place of the 1961 Act but the assessee-firm itself adopted the application of Section 13 of the Indian Partnership Act in other words, through Clause 24 of its partnership deed and, therefore, the partners are to share equally as per Section 13. Reliance of the learned departmental representative on the case of Dastur Dadi & Co.
(supra) is misplaced. In this case, actually Parekh Wadilal Jiwanbhai, In re.  42 ITR 266 (Bom.) was followed which was subsequently reversed by the Supreme Court in Parekh Wadilal Jiwanbhai's case (supra) with which we have dealt above. The Madras High Court decision in the case of A.S.S.R. Guruswami Chettiar (supra), instead of the revenue's support the contention of the assessee because in that case it is held that : ... Evidence regarding the shares of the partners should be offered within the four corners of the instrument used as the basis of the claim for registration and should not be made to depend on a reference and scrutiny of a number of other documents either between the same partners or between the partners and other third parties.... (p. 693) In the instant case, evidence regarding share is available within four corners as it is to be as per the Indian Partnership Act, as per Clause 24 of the partnership deed and as per Section 13, it is to be equal.
Similarly, reliance of the learned departmental representative on Rai Bahadur Jodha Mai Ghungar Mai's case (supra) is misplaced. As a matter of fact, the issue is covered by the Supreme Court decision on all fours in Parekh Wadilal Jivanbhai's case (supra).
4. In the result, the action of the AAC is reversed and the assessee's appeal is allowed.