1976 (11) TMI 94

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..... nto a partnership by virtue of the said partnership deed. 3. The assessee applied for registration of the firm by an application in form No. 11 accompanied by the original partnership deed. The ITO refused to grant registration on the short ground that the capital contribution clause in the partnership deed was not complied with in as much as Shri Rajinder Kumar did not contribute capital of Rs. 5,000 as stipulated in the deed. On appeal, the AAC confirmed the refusal of registration for the same reason. 4. In the appeal before us, it was submitted on behalf of the assessee that the ITO did not doubt the genuineness of the assessee firm and so far as the capital contribution is concerned, Shri Rajinder Kumar did contribute a part of the s .....

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..... d by an instrument of partnership that instrument must satisfy the individual shares of the partners and the partnership should be valid and genuine. In this connection, the Supreme Court has held in C.I.T vs. Sivakasi Match Exporting Co.(5)and CIT vs Abdul (A) Rahim & Co. (6) the jurisdiction of two facts namely: (a) Whether the application for registration is in conformity with the rules laid under the Act. (b) Whether the firm shown in the document presented for registration is a bogus one or has no legal existence. In the former case the supreme Court said: "A combined effect of s. 26A of the Act and the rules made thereunder is that if the application made by a firm gives the necessary particulars prescribed by the Rules, the ITO ca .....

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..... assessee, at the end of the accounting year, relevant to the assessment year under appeal, his capital stood at Rs. 3,799.69. This is substantial compliance with the capital contribution clause by Shri Rajinder Kumar. In view of this and the fact that the assessee firm was genuine, the ITO was not justified in refusing registration. We are supported in this view by the two decisions relied on by the assessee in which the Supreme Court decision referred to above were relied on. We also cannot lose sight of the fact that the ITO himself allowed registration to the assessee firm on the basis of the same partnership deed and substantially on the same facts for the asst. yr. 1972-73. The decision of the Calcutta High Court in the case of Hassa .....

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