Validity of partnership between HUF karta and family members upheld for firm registration under income-tax law.

A partnership between the karta of a Hindu undivided family and a coparcener or other family members was treated as legally valid because a partnership is a contract and no legal bar prevents such an arrangement merely due to the familial relationship. On that basis, the firm was not invalid for registration purposes under the Income-tax Act, 1961, and registration was held to be admissible.

---

---

Issues: Whether a partnership between the karta of a Hindu undivided family and a coparcener or other members of that family is legally valid and whether registration of the firm could be granted on that basis.

Analysis: The assessment years involved fell under the Income-tax Act, 1961. The dispute turned on the legal competence of the karta, acting for the Hindu undivided family, to enter into a partnership with family members. It was held that a partnership is a contract and that there is no legal bar preventing such a contract merely because one partner is the karta and the others are members of the same Hindu undivided family. On that basis, the firm could not be treated as invalid for registration purposes.

Conclusion: The partnership was valid and the assessee was entitled to registration; the answer was in favour of the assessee and against the Revenue.

---