Partnership clause restricting dissolution rights does not bar registration of a genuine firm under the Income-tax Act.

A valid partnership clause requiring notice for retirement and restricting two partners from compelling dissolution does not, by itself, bar registration of a genuine firm under the Income-tax Act. The High Court treated the clause as a permissible contractual arrangement, not an invalid restriction, because the firm's genuineness was not in dispute and the partnership deed was otherwise valid. Registration was therefore upheld and the issue was answered in favour of the assessee, against the Revenue.

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Issues: Whether registration of a firm under the Income-tax Act can be denied on the ground that a partnership clause restricted the right of two partners to terminate the partnership and seek dissolution.

Analysis: The partnership clause required notice for retirement and provided that the concerned partners could not force a dissolution of the firm. Such a term was held to be a valid contractual arrangement and not an invalid restriction. Since the genuineness of the firm was not in dispute and the deed itself was valid, the clause did not constitute an impediment to registration.

Conclusion: The Tribunal was right in granting registration to the firm, and the question was answered in the affirmative, against the Revenue.

Ratio Decidendi: A valid partnership clause restricting a partner's right to compel dissolution does not by itself bar registration of a genuine firm under the Income-tax Act.

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