Transport partnership on a partner's permit is not illegal, and firm registration remains available absent statutory prohibition.

A transport partnership is not illegal merely because operations were carried on using permits held by one partner. The Motor Vehicles Act, 1939 provisions on transfer of ownership, use of a transport vehicle under permit, and transfer of permits without permission did not require permits or vehicles to stand only in the firm's name. A partnership may conduct business with a partner's property, and admission of a partner does not by itself amount to transfer or sub-lease of the permit unless the deed shows such an arrangement. As no statutory prohibition or public policy bar was established, the firm was held entitled to registration under the income-tax law.

---

---

Issues: Whether a partnership formed for carrying on transport business was illegal because the business was conducted on permits held by one partner, and whether such a firm was entitled to registration under the Indian Income Tax Act, 1922.

Analysis: The relevant provisions of the Motor Vehicles Act, 1939 did not prohibit the formation of a partnership for transport business. Section 31 dealt with reporting transfer of ownership of a motor vehicle, Section 42(1) regulated use of a transport vehicle in accordance with a permit, and Section 59(1) prohibited transfer of a permit without permission. Those provisions did not require that a partnership could operate only on permits issued in the firm's name or only with vehicles owned by the firm. A partnership business may be carried on with property belonging to a partner, and the mere admission of a partner does not amount to transfer or sub-lease of the licence or permit unless the arrangement itself shows such a transfer. The deed here contained no clause transferring permits or vehicles to the firm, and the existence of the partnership was not made illegal by the fact that the transport business was conducted on the strength of permits held by one partner. The general rule under Section 23 of the Indian Contract Act, 1872 did not render the agreement void, because no statutory prohibition or public policy ground was established.

Conclusion: The partnership was not illegal and the assessee-firm was entitled to registration under Section 26-A of the Indian Income Tax Act, 1922.

---