Undivided coparcenary property cannot be converted into a valid partnership by partnership deeds alone for tax registration.

A Hindu undivided family business does not become a valid partnership for income-tax purposes merely because family members execute partnership deeds. Where the business capital and assets remain undivided coparcenary property and no partition of the joint family assets is shown, the concern continues in substance as a joint family business. In that situation, coparceners cannot simultaneously retain their joint family character and treat the same undivided property as partnership property. The article states that, on these facts, no valid partnership came into existence and registration of the firm was rightly refused.

---

---

Issues: Whether, on the facts and in the circumstances of the case, a valid partnership came into existence so as to justify registration of the firm under the Income-tax Act, 1961.

Analysis: The business had originally belonged to a Hindu undivided family and, on partition, was allotted to Sant Singh, but the capital employed in the business remained undivided coparcenary property. There was no material to show any partition of the business assets or of the capital among Sant Singh and his sons before the firm claimed registration. In the absence of a partial partition of the joint family assets brought into the business, the concern continued in substance as a joint family business, and the execution of partnership deeds by family members could not by itself create a partnership in law. The position was reinforced by the principle that coparceners cannot simultaneously remain members of a joint family and become partners in respect of undivided coparcenary property without partitioning it.

Conclusion: No valid partnership came into existence, and registration was rightly refused.

Ratio Decidendi: Where the capital and business assets remain undivided coparcenary property and no partition of the joint family assets is shown, members of a Hindu undivided family cannot, by executing partnership deeds alone, convert the joint family business into a valid partnership for income-tax purposes.

---