Genuine partnership controls continuation of registration; income classification alone does not defeat entitlement under tax law.

Continuation of registration under section 185 of the Income-tax Act depended on whether the firm remained a valid and genuine partnership under partnership law. The treatment of lease receipts as income from other sources was relevant to assessment, but it was not conclusive on the separate question of the firm's genuineness. Because the Tribunal had found the firm genuine in the relevant year, the classification of its income did not defeat registration. The assessee was therefore entitled to continuation of registration for the assessment year 1971-72.

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Issues: Whether a genuine firm was entitled to continuation of registration under section 185 of the Income-tax Act, 1961 for the assessment year 1971-72 merely because its income from leasing out a plant was assessed as income from other sources.

Analysis: The decisive inquiry was whether the firm continued to exist as a valid partnership under the Partnership Act. The head under which the income was assessed under the Income-tax Act was held to be relevant to assessment, but not conclusive on the separate question whether the partnership remained genuine. The classification of the receipts as income from other sources did not by itself negate the existence of a partnership or defeat continuation of registration, where the Tribunal had found the firm to be genuine in the relevant year.

Conclusion: The assessee was entitled to continuation of registration under section 185 of the Income-tax Act, 1961. The question referred was answered in the affirmative, in favour of the assessee and against the Revenue.

Ratio Decidendi: For continuation of registration, the determinative question is whether a valid and genuine partnership exists under partnership law; the classification of the firm's receipts under the income-tax heads does not by itself control that entitlement.

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