Genuine partnership status depends on mutual agency and deed terms, not labels or internal restrictions.

A partnership firm is entitled to registration where the deed, read as a whole, shows a definite agreement to share profits and losses and the relationship reflects mutual agency. Restrictions on one partner's capital contribution, banking functions, or management powers were treated as internal arrangements that did not destroy the partnership. The settled test is the real nature of the relationship, not labels such as paid partner or salaried partner. Recognition of the partner in earlier years also supported genuineness, and registration could not be refused on mere suspicion. On that basis, the firm was treated as a genuine partnership entitled to registration under the Income-tax Act.

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Issues: Whether the assessee-firm was a genuine partnership entitled to registration under section 185(1)(a) of the Income-tax Act, 1961.

Analysis: The partnership deed, read as a whole, showed that the partners had agreed to share profits and losses in a definite manner. Restrictions placed on one partner, including limits on capital contribution, banking operations, and management powers, were treated as internal arrangements and did not negate the existence of partnership. The Court applied the settled principle that a partnership depends on the real nature of the relationship and the element of mutual agency, not on labels such as paid partner or salaried partner. The Court also noted that the partner in question had been recognised as a partner in earlier years and that registration cannot be refused on mere suspicion.

Conclusion: The assessee-firm was held to be a genuine partnership and entitled to registration.

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