only ground in this departmental appeal is that AAC was not justified in directing to grant registration to assessee firm. ITO refused to registration firm on ground that two partners were found to be constantly absent for long time from business and that substantial portion of assets of assessee was in shape of business with M/s Shyam Sunder Agarwalla & Co. When matter went up in appeal before AAC it was contended on behalf of assessee that as per cl. (4) of partnership deed capital of firm was same which was standing in name of each partner with any contribution made by partner from time to time. It was pointed out that assessee firm had advanced money to M/s Shyam Sunder Agarwalla & Co., and interest to extent of Rs. 1,667 was received and shown in account. It was, therefore, claimed that ITO was not justified in refusing to register firm. AAC directed ITO to allow registration by observing as under: "I do not also consider that appellant firm can be treated as not genuine simply because M/s Shyam Sunder Agarwalla and Co. carried on business similar to business of contractor from whom assessee had stated that i t received service charges. It will be seen from accounts of assessee that most of contractors were same people from 1973 to 1975. When assessee offered for taxation income received from said contractors in earlier years in status of AOP ITO accepted and assessed income. He had accepted that there was genuine business of AOP. But when AOP converted itself into partnership firm by drawing up formal deed of partnership and submitting application under IT Act, ITO doubted genuine existence of business. In my opinion, this is not in order. Having carefully considered facts of case, I am of opinion that ITO is not correct in treating assessee as not genuine firm. I, therefore, direct ITO to grant benefit of registration to assessee for asst. yr. 1976-77." Against said order of AAC Revenue has preferred this appeal before me and it was contended by ld. departmental representative that ITO was justified in rejecting assessee's claim for registration since he found that partners did not render active service to business of assessee firm although it was condition precedent for becoming partners of assessee firm as per this deed of partnership. He submitted that assessee could not satisfactorily explain reason for advancing huge amount to M/s Shyam Sunder Agarwalla & Co. in which one of partners firm was also partner. ld. counsel for assessee, on other hand, highlighted reasons given by AAC for coming to conclusion that assessee firm was genuine one and was, therefore, entitled to benefit of registration. I find no material in departmental appeal. ITO refused to register firm on ground that two partners were found to be regularly absent from place of business and that assessee firm advanced huge amount of money to M/s Shyam Sunder Agarwalla & Co. in which one of partners of assessee firm was also partner. In my opinion, none of grounds can be said to be sound ground for rejection of registration. There is nothing in IT Act to show that all partners of firm should remain present in place of business throughout year. There is nothing to prevent firm to advance money to another firm in which one of partners of assessee firm is partner. It is to be mentioned that ITO has not given any reason for coming to conclusion that firm was not genuine. I, therefore, find no reason to interfere with order of AAC. In result, appeal is dismissed. *** INCOME TAX OFFICER v. EASTERN BUSINESS SERVICES