Distinct contracting parties are essential for partnership registration; a person cannot form a valid firm with himself as karta.

A valid partnership for income-tax registration must be constituted by at least two distinct and independent contracting persons. Where the arrangement was between an individual assessee on one side and the same assessee acting as karta of his Hindu undivided family on the other, no separate legal persons existed to form a partnership. A Hindu undivided family, as such, does not become a partner merely because its managing member executes the deed. The alleged firm therefore lacked the essential element of distinct parties in law, and registration was not admissible.

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Issues: Whether a firm could be registered under the Income-tax law where the alleged partners were the assessee in his individual capacity and the same assessee as karta of his Hindu undivided family.

Analysis: The deed of gift was construed as vesting the donor's share absolutely in the assessee, but the partnership deed disclosed that the alleged firm was to be between the assessee on one side and the Hindu undivided family represented by him as karta on the other. A valid partnership requires an agreement between at least two independent contracting persons. A Hindu undivided family, as such, does not become a partner merely because its managing member enters into an arrangement. Since the assessee in his individual capacity and the assessee as karta were not separate legal persons, the alleged partnership lacked the essential element of distinct contracting parties and could not be treated as a firm in law.

Conclusion: The question was answered in the negative, and registration of the alleged firm was not entitled to be granted.

Ratio Decidendi: A partnership for registration must be constituted by two separate and independent contracting persons; a person cannot enter into a valid partnership with himself, even if he purports to act in another capacity as karta of a Hindu undivided family.

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