Partnership firm registration turns on genuineness, and missing balance sheet or separate capital account is not decisive.

A partnership firm's entitlement to registration was examined where the tax authority objected that no balance sheet was drawn up and no separate capital account was maintained. The accounts showed that books of account were kept and the partnership deed existed; the omission to prepare a balance sheet was treated as a mere formality, and the absence of a separate capital account was held to be immaterial to the genuineness of the firm. In the absence of any other adverse fact, the firm was regarded as genuine and entitled to registration, and the refusal to register was set aside.

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Issues: Whether refusal to grant registration to the assessee firm was justified on the ground that no balance sheet was drawn up and no separate capital account was maintained.

Analysis: The firm was constituted by a partnership deed and the accounts showed that books of account were maintained. The omission to draw up a balance sheet was treated as a mere formality and not a circumstance that by itself affected the genuineness of the firm. The absence of a separate capital account was also held to be not material, in view of the existing authority that such a circumstance does not determine whether a partnership is genuine. No other adverse fact bearing on genuineness was found.

Conclusion: The firm was held to be genuine and entitled to registration, and the refusal to register was set aside.

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