1983 (8) TMI 105 - AT - Income Tax

Summary

Issues:
1. Withdrawal of registration under the Income-tax Act due to partnership legality under the Gold (Control) Act.
2. Interpretation of the definition of "dealer" under the Gold (Control) Act.
3. Applicability of Special Bench decision on partnership legality under different Acts.
4. Validity of registration of a partnership firm under the Income-tax Act.

Withdrawal of Registration:
The appeals were filed by the revenue against the withdrawal of registration granted to a partnership firm under the Income-tax Act. The Assessing Officer withdrew the registration citing that the partnership was illegal as the licence under the Gold (Control) Act was only in the name of one partner, contravening the provisions of the Gold (Control) Act. The registration was cancelled for the assessment years in question based on previous decisions.

Interpretation of "Dealer" under Gold (Control) Act:
The Tribunal analyzed the definition of "dealer" under the Gold (Control) Act, which includes any person or firm carrying on the business of dealing in gold. The term "dealer" encompasses both individuals and firms, allowing them to conduct business directly or indirectly. As long as there is no prohibition on a firm acting as a dealer under the Gold (Control) Act, holding a licence in the name of one partner does not automatically render the partnership illegal.

Applicability of Special Bench Decision:
The decision of the Special Bench in a different case under the Abkari Act was considered relevant in this case. The Tribunal held that the principles established in the Special Bench decision applied to the present situation, where the exploitation of a licence by a partnership did not amount to a transfer of the licence. The partnership deed did not indicate a transfer of the licence to the firm, supporting the legality of the partnership under the Gold (Control) Act.

Validity of Registration:
After considering the arguments and records, the Tribunal upheld the order of the Dy. CIT (Appeals) that there was no illegality in the partnership formed by the assessee. The registration originally granted to the partnership firm was deemed valid and not subject to withdrawal. Consequently, the revenue's appeals were dismissed, affirming the legality of the partnership under the Income-tax Act.