Genuine partnership and no legal bar support registration under section 26A, despite revenue loss concerns.

A partnership firm was held entitled to registration under section 26A of the Income-tax Act, 1922 because the Tribunal found the partnership deed and amendment deed created a valid and genuine partnership in conformity with the Indian Partnership Act, 1932. With no legal bar to formation established, registration could not be refused merely because it might reduce revenue collection. The question was therefore answered in the affirmative in favour of the assessee-firm.

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Issues: Whether the assessee-firm was entitled to registration under section 26A of the Income-tax Act, 1922 on the basis of the partnership deed and amendment deed.

Analysis: The Tribunal found that the partnership was validly constituted and genuine on the facts and circumstances of the case. It accepted that the deeds created a real partnership in conformity with the Indian Partnership Act, 1932, and there was no legal bar to its formation. A firm cannot be denied registration merely because revenue may thereby suffer a loss.

Conclusion: The assessee-firm was entitled to registration under section 26A, and the question was answered in the affirmative in favour of the assessee.

Ratio Decidendi: Where the Tribunal records a finding that the partnership is valid and genuine and no legal prohibition exists, registration under section 26A cannot be refused merely on revenue considerations.

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