AGARWAL AND CO. vs COMMISSIONER OF INCOME-TAX, U.P.

The Supreme Court held that under Section 26A of the Income-tax Act, 1922, a partnership must be constituted according to the provisions of the Partnership Act, 1932, and only 'persons' can join as partners. The Court ruled that a Hindu Undivided Family cannot enter into a partnership as it lacks legal personality, thus invalidating the assumption in Section 4(3) of the Companies Act, 1913, that such families can be partners. The appeal was allowed, confirming that the Income Tax Officer cannot refuse registration based on an interpretation that goes behind the partnership deed.