Section 26a, Income-tax Act, requires an instrument of partnership by which the firm of which registration is sought was constituted, an instrument executed at or before the commencement of the relative accounting year, and an instrument which governed the distribution of the profits in that year.

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.

( 4 ) AFTER the rejection of the application by all the authorities, the alleged firm applied to the Tribunal for a reference to this Court of a question of law said to arise out of the refusal to register the partnership. The Tribunal acceded to the application and has referred the following question to this Court:"whether the assessee firm which is alleged to have come into existence by a verbal agreement fin April, 1943, is entitled to be registered Under Section 26a for the purpose of assessment for 19-13-50, where the Instrument of Partnership was drawn up only in September, 1949, after the expiry of the relevant previous year?""the answer to the question depends upon the true construction of Section 26a, Income-tax Act read with Rules 2 and 3 and the prescribed form of the application. Sub-section (1) of the section reads thus: "application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of tills Act and of any other enactment for the time being in force relating to income-tax or super-tax. "

( 5 ) MR. Mitra, who appeared on behalf of the assessee, contended that what the section really required was merely a deed in writing, pinbodying therein the particulars regarding the firm which were required to be r

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