Partnership validity turns on profit-sharing and factual compliance, not every partner's capital contribution or active management.

A partnership remains valid where two or more persons agree to share profits of a business carried on by all or any of them acting for all, and section 4 of the Indian Partnership Act, 1932 does not require every partner to personally manage the business or contribute capital. The existence of a genuine firm is primarily a question of fact. Where profits are actually divided and credited under the partnership deed and the arrangement is otherwise complied with, the presence of dormant partners or control by only some partners does not by itself negate the firm. On that basis, the assessee-firm was treated as genuine and entitled to registration.

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Issues: Whether the assessee-firm was a genuine firm entitled to registration, and whether absence of capital contribution by some partners or their limited participation in management negatived the existence of a valid partnership.

Analysis: The existence of a genuine firm is essentially a question of fact. Under section 4 of the Indian Partnership Act, 1932, a partnership is constituted by an agreement between two or more persons to share the profits of a business carried on by all or any of them acting for all. The law does not require that every partner must personally carry on the business or contribute capital. Where profits are actually divided and credited according to the partnership deed, and the partnership arrangement is otherwise complied with, the mere fact that some partners are dormant or that two partners controlled the business does not invalidate the firm.

Conclusion: The assessee-firm was held to be a genuine firm and was entitled to registration; the objections based on non-contribution of capital and limited participation of some partners were rejected.

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