Ajit K.Sengupta, J. - (1.) Pursuant to the direction of the Supreme Court in Civil Appeal No. 216 of 1982, the following question of law has been referred to this court for the assessment year 1972-73 under Section 256(2) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the firm of Hind Steel Corporation was entitled to be registered under Section 184 read with Section 185 of the Income-tax Act, 1961, for the assessment year 1972-73 "
(2.) Shortly stated, the facts are that the Income-tax Officer, vide his order dated December 22, 1973, under Section 185 of the Income-tax Act, 1961, has refused registration, inter alia, with the following observations : "... Therefore, this clause cannot, by any stretch of imagination, be taken for the allocation clause. It merely records the intention of the partners to continue the business. The fact remains that the partnership deed is not particular on the question of allocation of profit or loss. The other arguments of the authorised representative boil down to the point that, constructively, with reference to surrounding facts, viz., previous partnership was an equal partnership and that the accounts show equal allocation of the profits amongst the partners and that Form No. 11A shows them as equal partners, there is no doubt that the partners are intended to be equal under the deed. But I cannot agree with the authorised representative. In so far as the partnership deed omits to provide for the allocation of both profit and loss, the deed itself is invalid and there cannot be any partnership validly constituted ultra vires the law of partnership. Registration is not, therefore, granted to the firm."
(3.) The said finding of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner, vide his order dated July 14, 1977.;