Genuine partnership entitled to tax registration despite untransferred bus permits where business control remained with the firm.

A genuine partnership is not denied income-tax registration merely because bus route permits used in its transport business remain in the name of a third party and have not yet been formally transferred. The firm's possession and business control of the buses under the arrangement with the original owner was treated as sufficient to show that the business was being carried on by a real firm, not an unlawful association. On that basis, entitlement to registration under section 185 of the Income-tax Act, 1961 was recognised and the refusal of registration was set aside.

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Issues: Whether the assessee-firm was entitled to registration under section 185 of the Income-tax Act, 1961, notwithstanding that the bus route permits had not been transferred in its name.

Analysis: The question was governed by the principle that a partnership does not become illegal for income-tax registration purposes merely because the transport permits used in the business stand in the name of another person and have not yet been formally transferred. The firm was found to be genuine and to have acquired possession and business control of the buses under the arrangement with the original owner. The absence of a completed transfer of the permits did not convert the partnership into an unlawful association so as to disentitle it from registration.

Conclusion: The assessee-firm was entitled to the benefit of registration under section 185 of the Income-tax Act, 1961.

Final Conclusion: The reference was answered in favour of the assessee, and the refusal of registration was set aside.

Ratio Decidendi: A genuine partnership is not denied registration under the Income-tax Act merely because the transport permits used in its business remain untransferred in the name of a third party, if the business itself is otherwise carried on by the firm.

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