Genuine constitution of partnership supports income-tax registration; documentary evidence outweighed defects in registration and notice.

A partnership was held to have come into existence for income-tax registration purposes where the deed, trust resolution, relinquishment deed and capital contribution showed a genuine intention to constitute and operate the firm. Non-registration of the relinquishment deed and the absence of express notice to banks were insufficient, by themselves, to negate the firm's legal existence. The Tribunal's contrary inference was treated as unsupported by the record. The partnership was therefore registrable under section 26A of the Income-tax Act, 1922.

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Issues: Whether the partnership evidenced by the deed dated 1 December 1942 legally came into existence and was entitled to registration under section 26A of the Income-tax Act, 1922.

Analysis: The trust deed, the resolution authorising the trustees to enter into partnership, the partnership deed, the deed of relinquishment, and the introduction of capital by the trust all showed that the new arrangement was intended to operate as a real partnership. The unregistered relinquishment deed did not, by itself, negate the constitution of the firm, and non-registration under the Partnership Act did not prevent the firm from existing in law. The circumstance that the banks were not expressly notified of the change in constitution was insufficient to displace the documentary and surrounding evidence. The Tribunal's later inference that no new firm existed was treated as unsupported by the record and based on an incomplete appreciation of the material.

Conclusion: The partnership did legally come into existence and there was no legal impediment to its registration under section 26A of the Income-tax Act, 1922, in favour of the assessee.

Final Conclusion: The reference was answered by holding that the partnership was validly constituted on the facts stated and was registrable under the Act.

Ratio Decidendi: A partnership may be held to have come into existence for income-tax registration purposes where the documentary record and surrounding circumstances establish a genuine intention to form and operate the firm, and mere defects such as non-registration of a relinquishment deed or absence of notice to banks do not by themselves defeat its legal constitution.

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