1. In this case it appears that three persons together with a fourth, the mother of one of them, were carrying on a business in copartnership as dealers in piecegoods and commission agents under the name and style of Ramlal Murlidhar. By a memorandum of agreement dated 30th day of April 1928, and made between the three persons to whom I have referred and between them only, it was nevertheless recited that the parties to the agreement together with one Mt. Rajo, the mother of Ramlal, were carrying on business in copartnership as I have stated. The instrument then went on to express an agreement that the partnership business should continue and that the profits of the business should belong to the partners in certain shares - the lady, Mt. Rajo being declared to have one equal twentieth part or share therein. By another clause, it was provided that, if there was any loss, the loss was to be paid and borne by the partners rateably and in proportion to their respective shares in the profits of the business. The instrument was executed by the three partners mentioned above and not by the fourth-Mt. Rajo. Thereupon it was tendered to the Income-tax Officer as an instrument such as is contemplated by Clause 14, Section 2 of the Act, and, although all the parties to the instrument had executed it, the Income-tax authorities refused to accept it for reasons which are given by the Commissioner of Income-tax as follows:
A partnership to be valid does not require its terms to be embodied in an instrument. Moreover a defective-instrument may be supplemented by other evidence, such as conduct of. the partners, to establish and define those terms. But the Income-tax Act and the rules framed thereunder make provision for the registration of those firms only that are constituted under instruments of partnership and of no other: firms. It is implied, in my opinion, that a complete instrument only was intended to be valid for registration, that is to say, an instrument which does not require supplementation by other evidence, but contains in itself the complete agreement constituting the partnership and by itself solely operates to create the partnership. I do not mean to say that an instrument of partnership must consist of one document only.
But an instrument must consist of a document or documents, and no such acceptance in writing by the fourth partner being forthcoming, the so called instrument of partnership remains an incomplete instrument.
2. In my opinion it is not correct to hold, on the instrument before us, that for the reasons given, it is to be rejected under Clause 14, Section 2. No doubt whether we look to the Act or to the rules made thereunder, there must be a firm constituted under the instrument; but when we come to ask ourselves what is sufficient to satisfy the requirement of the firm being constituted under the instrument, I am not prepared to say with the Com-missioner that it is implied that a complete instrument only is intended to be valid for registration, that is to say, an instrument which does not require supplementing by other evidence but contains in itself the complete agreement constituting the partnership and by itself solely operates to create the partnership. It appears to me to be not impossible that a firm should be constituted under an agreement, although the agreement has not been executed by all the partners. No doubt it would be very reasonable to have this requirement and I need express no opinion as to whether it is open under the rule-making power given by the Act that such requirement should be insisted upon. I am unable to say that either the Act or the rules go so far as the Commissioner of Income-tax has in this case considered. I say nothing by way of objection to the proposition that the Income-tax Officer may have the right to satisfy himself that the transaction evidenced by the instrument is a real thing. But in my opinion if the Commissioner of Income-tax comes to the conclusion that before her death Mt. Rajo had assented to this instrument and that when it was put forward for registration it was put forward by her along with the other partners to be registered, it is such a document as may be admitted to registration under the Income-tax Act.
3. We have been referred to a decision of the Court of the Judicial Commissioner of Sind: Bulchand Keshavdas v. Commissioner of Income-tax A.I.R. 1930 Sind 301, 303, Col. 2. Mr. Roy has adopted the observations of Rupchand, A. J. C. In that case as part of his argument. It appears to me that the reasoning of the learned Additional Judicial Commissioner supports the view which I have expressed.
4. The assessees should have their costs of this reference.
C.C. Ghose, J.
5. I agree.
6. I agree.