Comment on the following: Process of registration of Partnership Firm under Income-Tax Law.

The partnership is based on contract of partnership deed or agreement. This deed is executed by all the partners and is drafted as an agreement to carry on certain business in partnership on certain terms and conditions. While drafting partnership deed we should incorporate all terms and conditions that govern a particular partnership business. Partners of any partnership business are normally interested in settling certain terms amongst them before they join hands to carry on business in partnership. Registration of partnership firm has been made optional under the provisions of Section 58 of the Indian Partnership Act, 1932. However, registration of partnership under the Income-tax Law is distinct from registration of firm under the Partnership Act. A partnership to be recognised for the purpose of income tax liability of the partners and their firm is required to comply with certain provisions of the Income Tax Act. While therefore drafting a deed of partnership the provisions of the Act are required to be taken in to account. Rule 22 of Income-tax Rules, 1962 provides that an application for registration of partnership firm, in form 11 or 11A as the case may be, should be accompanied with an instrument of partnership specifying the apportionment of shares of profit and losses of the business amongst the partners of the firm. If a copy of instrument of partnership cannot be submitted, sufficient reasons towards this shall be narrated. Such application shall be signed by all the partners of the firm. This registration is required to be renewed every year under the orders of the concerned Income-tax Officer.