Genuine partnership registration upheld where book entries, valid gifts, and managing-partner control did not defeat firm authenticity.

A partnership was held to be genuine where the sons' capital contributions were supported by contemporaneous book entries and the surrounding circumstances showed real gifts, so the absence of manual delivery did not defeat transfer of money. The father's dominant role in management did not make the firm fictitious because a managing partner may lawfully control the business. Delay in transferring the excise licence also did not affect genuineness, as partnership formation was not prohibited and only appropriate licence amendment was required. Registration under section 26A was therefore wrongly refused.

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Issues: Whether there was material to hold that the partnership was not a genuine firm and therefore was not entitled to registration under section 26A of the Indian Income-tax Act.

Analysis: The capital introduced by the sons was supported by contemporaneous credit entries in the father's books, the surrounding circumstances showed an intention to make real gifts, and the absence of manual delivery did not defeat the transfer where the subject-matter was money and the entries, read with subsequent conduct, evidenced a completed gift. The partnership deed and the fact that the father retained dominant management did not make the firm fictitious, since a managing partner may lawfully control the business. The delayed transfer of the excise licence also did not impair genuineness, as the law did not prohibit entry into partnership and only required suitable amendment of the licence.

Conclusion: The firm was a genuine partnership, and refusal of registration under section 26A was unjustified; the question was answered in favour of the assessee.

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