Hindu family partition does not defeat partnership registration where the partner remains the genuine contractual member.

A partition of a Hindu undivided family did not, by itself, affect the validity or registrability of a partnership in which one member continued as the contractual partner. Partnership law and Hindu law operate in distinct fields: the family's internal disruption alters only the inter se rights of its members and does not make the firm invalid or change its constitution, unless the arrangement is a sham or the named partner is not the partner. The cancellation of the firm's registration was therefore unjustified, and registration for the relevant assessment years was sustained.

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Issues: Whether the disruption of a Hindu undivided family, whose share in a partnership continued to be represented by a member of the family, justified cancellation of the firm's registration and refusal of registration for the relevant assessment years.

Analysis: The partnership law and Hindu law operate in distinct fields. A member of a joint family may validly represent the family in a partnership, and the family's disruption does not by itself alter the position of that member as a partner in the firm. The other members of the family acquire rights inter se under Hindu law, but they do not become direct parties to the partnership. The effect of partition is only to change the internal character of the family's interest, not the constitution or genuineness of the partnership itself. The Department cannot treat a genuine partnership as invalid merely because the family interest supporting one partner has been divided among several members, unless the arrangement is a sham or the partner shown in the deed is not in fact the real partner.

Conclusion: The cancellation of registration was not justified, and the firm remained entitled to registration for the years in question.

Final Conclusion: The reference was answered in favour of the assessee, and the Commissioner's order cancelling registration was set aside.

Ratio Decidendi: A partition of a Hindu undivided family does not, by itself, affect the continuance or registrability of a partnership in which a member of that family was already a partner; the partnership remains valid so long as the arrangement is genuine and the partner continues to be the contractual member of the firm.

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