Renewal of firm registration cannot be refused for lack of separate personal accounts when statutory requirements are otherwise met.

Renewal of firm registration could not be refused merely because losses were not shown through separate personal accounts, where the firm was genuine, previously registered, and the renewal application was in the prescribed form with the partnership deed and a certificate showing division of losses by shares. The statutory scheme required a valid instrument, a proper application, and allocation of profits or losses in accordance with the deed; it did not prescribe any particular accounting method in the absence of such a term in the deed. On those facts, the department had no basis to deny renewal, and registration ought to have been continued for the assessment year 1959-60.

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Issues: Whether renewal of registration of the firm for the assessment year 1959-60 could be refused on the ground that the losses were not shown as divided through personal accounts and whether the application otherwise satisfied the requirements of section 26A and the rules framed thereunder.

Analysis: The firm was already accepted as genuine and had been registered for the earlier year. The application for renewal was in the prescribed form, was supported by the partnership deed, and contained a certificate showing division of the losses among the partners in accordance with their respective shares. The deed did not prescribe any particular mode of accounting for loss. The statutory scheme required only that the firm be constituted under an instrument specifying shares, that the application be properly made, and that the profits or losses of the previous year be credited or debited in accordance with the instrument. In the absence of any rule requiring personal accounts or a particular accounting method, the department could not refuse renewal merely because the losses were shown in a loose statement rather than in separate partner accounts.

Conclusion: The refusal to renew registration was not justified. The application complied with the statutory requirements and the registration ought to have been renewed for the assessment year 1959-60 in favour of the assessee.

Ratio Decidendi: Where a genuine firm files a proper application for registration or renewal and the partnership deed does not require a specific accounting method, registration cannot be refused merely because the profit or loss is not recorded in a particular form, so long as the statutory requirements are otherwise satisfied.

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