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Registration of the assessee firm based on non-contribution of capital by some partners as required under the partnership deed. Analysis: The Income Tax Officer (ITO) denied registration to the firm due to partners not contributing capital as per the partnership deed, citing legal precedents including a Supreme Court decision and a Calcutta High Court decision. The Commissioner, however, directed the ITO to grant registration to the firm based on a Gujarat High Court decision. The Departmental Representative challenged this decision, arguing that the Gujarat High Court decision was not applicable and emphasized the importance of compliance with partnership deed terms. The Departmental Representative also raised concerns about the calculation of profits due to non-contribution of capital by some partners, referencing legal judgments to support the denial of registration. On behalf of the assessee, it was argued that the Gujarat High Court decision supported the firm's case, stating that non-contribution of capital did not impact the firm's genuineness. The Supreme Court decision cited by the ITO was deemed irrelevant to the current case as it pertained to general conditions for registration. The main issue was whether non-contribution of capital affected the firm's genuineness and if registration could be refused on that basis. The Tribunal found that non-contribution of capital by some partners did not affect the firm's genuineness and should not be a reason to deny registration. The Tribunal highlighted that the ITO did not mention any difficulty in calculating profits due to non-contribution of capital in the assessment order. The Tribunal differentiated the current case from the Supreme Court decision, emphasizing that the partnership deed was intended to be acted upon despite any subsequent breaches. Ultimately, the Tribunal held that the firm was entitled to registration, dismissing the appeals.
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