Partnership registration depends on validity of partner interest transfer, not mere presence of immovable assets in firm property.

A partnership deed was held to create a valid firm in law where it identified the partners, their shares and the capital contribution, and the supporting relinquishment deed was treated as a transfer of interest in partnership assets rather than a conveyance requiring registration solely because immovable property formed part of those assets. A partner's interest in partnership property was regarded as movable property, and any registration defect as to the immovable-property element did not invalidate the instrument in relation to the movable assets. On that basis, the partnership was recognised as legally constituted and eligible for registration under section 26A of the Income-tax Act.

---

---

Issues: Whether the partnership evidenced by the deed of 1 December 1942 had legally come into existence and was entitled to registration under section 26A of the Income-tax Act, despite the contention that the relinquishment deed affecting the partnership assets was unregistered.

Analysis: The relevant inquiry was confined to the legal validity of the partnership, not to a pure question of fact about whether it had come into existence at all. The partnership deed constituted a firm between the Kamla Town Trust and Jhabbarmal Saraf, specified their respective shares, and the trust contributed capital. The relinquishment deed executed by the earlier partners was in substance a transfer of their interest in the partnership assets. Such a deed did not require registration merely because the firm owned immovable properties, since a partner's interest in partnership assets is treated as movable property. Even if registration had been required for the immovable-property element, the instrument was severable, and invalidity as to immovable assets would not destroy its effectiveness as to movable assets. On that basis, the transfer was effective enough to support the constitution of a valid partnership in law.

Conclusion: The partnership was valid in law and was entitled to registration under section 26A of the Income-tax Act.

Ratio Decidendi: A deed transferring a partner's interest in partnership assets does not require registration merely because the partnership assets include immovable property, and an instrument affecting partnership assets may be effective to the extent it relates to movable assets even if registration is unnecessary or ineffective as to immovable assets.

---