Dipak Kumak Sen, J. - (1.) The short facts in this reference are, inter alia, that Messrs. R. S. Singh & Co., the assessee, is a partnership constituted under a deed dated the 18th May, 1953. The material parts of the said deed are, inter alia, as follows : "Partnership deed This Indenture of partnership made this 18th day of May one thousand nine hundred and fifty-three Between 1. Ram Swarth Singh, son of late Dargga Singh, by caste Hindu by profession trader and a contractor at present residing at Kanchrapara within the district of 24 Pgs. Of the first part. And 2. Rambalak Singh Sachidanand Singh, a Hindu undivided family, consisting of Ram Balak Singh and Sachidanand Singh where the karta is Rambalak Singh by caste Hindu by profession a trader and a contractor at present residing at Kanchrapara within the district of 24 Pgs. Of the second part. And 3. Chandradip Singh, son of Sri Sital Singh, by caste Hindu by profession a trader and a contractor at present residing at Kanchrapara within the dist. of 24 Pgs. Of the third part. (All the above persons hereinto, referred to as 'Party' which expression, unless repugnant to or inconsistent with the context, shall mean and include their heirs, executors, administrators, legal representatives and assigns)... 3. That the partnership shall be at will but shall not be dissolved by death, insolvency or retirement of any partner but shall be carried on by rest of the partners except in case of death of any partner when male heir or legal representative of deceased partner shall be forthwith admitted as a co-partner with all the rights and liabilities of the deceased partner..... 9. That the profits and losses in the said business will be divided among the partners respectively as below : JUDGEMENT_30_ITR118_1979Html1.htm In witness whereof the parties hereto do hereunto set and subscribe their respective hands and seals on the date first above-written. Name & Address of Witness :-- Signatures of Partners. Sd. Ram Swarth Singh. Sd. Rambalak Singh. Sd. Chandradip Singh."
(2.) The assessee had been granted registration in the past assessment years. For the assessment year 1962-63, the relevant previous year being that ended on the 31st March, 1962, the assessee filed a declaration under Section 184(7) of the I.T. Act, 1961, along with its return of income. The ITO refused registration to the assessee on the ground that the assessee, a partnership, had been purportedly constituted with two individuals and an HUF which was not permissible in law. The ITO came to the aforesaid conclusion relying on the description of the parties in the preamble of the deed as set out hereinbefore.
(3.) Being aggrieved, the assessee preferred an appeal. The AAC upheld the order of the ITO relying on the preamble and the clause dealing with the division of profits and loss which also treated the HUF as a partner and specified its share. He also found that, in the capital account of the assessee, net profits had been credited to the HUF.;