Partnership registration upheld where contract assignment was not prohibited and alleged bid rigging was unproved.

A partnership exploiting forest coupe contracts through agreements taken in the names of individual partners was not unlawful where the statute did not prohibit the arrangement. The Tribunal's finding that there was no proof of rigging or knock-out bids was a finding of fact and could not be reopened in reference. The Forest Act did not bar such exploitation, section 18 authorised the contracts, and the agreements contemplated assignment. Any breach of clause 2 was at most a contractual breach, not illegality under the Forest Act. The firm was therefore lawfully constituted and entitled to registration under section 26A of the Income-tax Act, 1922.

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Issues: Whether the assessee firm was lawfully constituted and entitled to registration under section 26A of the Income-tax Act, 1922, despite the contracts being taken in the names of individual partners and the allegation of rigging or knock-out bids.

Analysis: The finding of the Tribunal that there was no proof of rigging or knock-out bids was a finding of fact and was not liable to be reopened in the reference. The Forest Act did not prohibit exploitation of coupe contracts by the firm where the contracts were taken by individual partners, and section 18 authorised such contracts. The contracts themselves contemplated exploitation by assigns, and clause 2 of the agreement, even if infringed, could at most give rise to a contractual breach and not to illegality under the Forest Act.

Conclusion: The assessee firm was lawfully constituted and was entitled to registration under section 26A of the Income-tax Act, 1922; the question was answered in favour of the assessee.

Ratio Decidendi: Where the statute does not prohibit the arrangement, exploitation of government contracts by a partnership through contracts entered into in the names of individual partners is not illegal, and a mere breach of a contractual clause does not negate the firm's entitlement to registration.

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