Benami partnership shares do not defeat registration where the firm is genuine and the deed correctly states individual shares.

A genuine partnership under section 26A of the Indian Income-tax Act, 1922 could not be refused registration merely because one partner was a benamidar for another. The decisive question was whether the firm was legally existent and whether the partnership deed correctly specified the individual shares of the persons shown as partners. A benami or dummy arrangement affected only the beneficial ownership between the real owner and the benamidar, not the contractual rights and liabilities created by the deed inter se. On that basis, the instrument remained valid for registration purposes, and the stated share of the benamidar was treated as the correct individual share.

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Issues: Whether a firm whose partnership deed specified the partners' shares could be refused registration under section 26A of the Indian Income-tax Act, 1922 merely because one partner was a benamidar or dummy for another, and whether such a relationship affected the correctness of the individual shares stated in the instrument.

Analysis: Registration under section 26A was available only to a firm constituted under an instrument of partnership specifying the individual shares of the partners and satisfying the prescribed procedural requirements. The decisive question was whether the firm was genuine and legally existent. A benamidar, being in law a trustee or representative of the real owner, can nevertheless enter into a partnership in his own name with others. The internal arrangement between the benamidar and the real owner does not alter the contractual rights and liabilities created by the partnership deed as between the partners inter se. Once the firm is found to be genuine and the instrument correctly states the shares of the persons shown as partners, the Income-tax Officer cannot refuse registration on the ground that one partner has no beneficial interest in his share because of a private benami arrangement.

Conclusion: The Income-tax Officer could not refuse registration solely because one partner was a benamidar of another, and the share allotted to the benamidar was a correct specification of his individual share. The firm was entitled to registration, but the appeal was dismissed because the High Court's answer was upheld.

Ratio Decidendi: A genuine partnership registered under section 26A of the Indian Income-tax Act, 1922 cannot be denied registration merely because one partner is a benamidar of another; the benami arrangement affects only beneficial ownership and not the validity of the partnership deed or the specification of the partner's individual share.

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