Chakravaetti, C.J. - (1.) This is a Reference under Section 66 (1), Indian Income-tax Act of a question of law which so far as this Court is concerned, is a question of first impression. Broadly stated, the question is whether the only partnership which can be registered under Section 26A, Income-tax Act for the purposes of a particular assessment is a partnership created, by an instrument executed at or before the commencement of the relative accounting year or whether a partnership created by verbal agreement can also be registered, if the agreement is subsequently embodied in an instrument although, so far as the relative accounting year is concerned, the partnership may have rested solely in the verbal agreement,
(2.) The facts out of which the question has arisen in the present case are as follows. With respect to its assessment for the assessment year 1949-50, an alleged firm, calling itself Messrs R. C. Mitter and Sons, made an application for registration and, along with the application, filed an instrument of partnership executed on 27-9-1949. The relative accounting year was the period between 14-4-1949, and 13-4-1949. The applicant's case was that a partnership had been formed by verbal agreement on 14-4-1948, and that throughout the accounting year that partnership had subsisted. In support of its case that the partnership had come into existence on 14-4-1948, the applicant relied on a letter addressed to a bank on 15-4-1948, whereby the constitution of the firm was communicated to the bank. It would, however, appear from that letter that if it represented the correct state of things, the firm had been constituted even earlier and what had happened on 14-4-1948, was that a third son of Sri. R. C. Mitter had been admitted to the partnership. The letter contained no specification of the shares of the individual partners.
(3.) The Income-tax Officer rejected the application for registration and so did the Appellate Assistant Commissioner and the Appellate Tribunal. The reason given by the Tribunal was that as the instrument of partnership had been executed only in September, 1949, long alter the close of the relevant previous year, it could not possibly govern the distribution of the profits of the firm In that year and, therefore, no registration under Section 26A of the Act could be claimed on the basis of that instrument. It is obvious that the Tribunal proceeded on the view that what Section 26A requires is an instrument of partnership by which the firm is created and an instrument creating the firm at or before the commencement of the relevant accounting year.;