Partnership firm registration cannot be refused merely because capital was not paid in one lump sum when the firm is genuine.

Registration under the Income-tax Act depends on a valid partnership instrument, a properly made application, and the existence of a genuine firm. On the facts noted, the firm was genuine and the partner concerned had contributed capital during the year, with the capital account reflecting instalment-wise compliance. The partnership deed did not require immediate lump-sum payment of the entire stipulated capital, so refusal of registration could not rest only on non-payment of the full amount at once. The assessee was therefore entitled to registration and the refusal was not justified.

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Issues: Whether refusal of registration of the partnership firm was justified on the ground that one partner did not immediately contribute the full capital stipulated in the partnership deed.

Analysis: Registration under the Income-tax Act depends on a duly made application supported by a valid instrument of partnership and on the existence of a genuine firm. The record showed that the firm was genuine and that the partner concerned had contributed capital in part during the relevant year. The deed did not make immediate lump-sum payment of the entire stipulated capital mandatory, and the actual credit balance in the partner's capital account reflected compliance in instalments. The objection based only on non-payment of the whole amount at once could not defeat registration where the firm otherwise satisfied the statutory requirements.

Conclusion: The refusal of registration was not justified and the assessee was entitled to registration.

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