9911796707
TMI Blog1988 (5) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... TO, vide his order dt.24th Dec., 1979by observing that the firm applied in form No. 11 alongwith partnership deed, duly completed in all respects, that the profits were found to be divided in accordance with the terms of the partnership deed, that all the legal formalities were completed and that there was nothing to doubt the genuineness of the firm. Subsequently another ITO noted that the partnership was not validly constituted as per the provisions of Punjab Excise Act, 1914 and the Punjab Liquor and Licence Rules, 1956. In his opinion, on the licence issued by the Excise Authorities, the names of all the four persons must have been incorporated and since all the four names were not incorporated, there was violation of the rules of Punjab Liquor Licence Rules, 1956, which provides that no person shall possess beyond the permissible quantity an intoxicant without licence, that if the licence is affirmed, it is prohibited from taking new partners, without the approval of the concerned authorities. So the ITO considered that Meeran Ghati Vend was a separate firm consisting of those two partners, Milki Ram and Chaman Lal and the carrying on of that business by associating Baru Ram a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the profits and losses arising out of the use of the licence, does not transfer his licence in the eye of law and consequently there was no violation of the Excise Rules. When such being a law, as explained by the Andhra Pradesh High Court, the authorities below, it was submitted, wrongly construed the licences issued in this case, because all the partners were recognised licensees, though in respect of two separate shops and they come together to carry on the business by sharing their experiences and providing necessary finances and by this association as partners did not offend any of the Rules of the Punjab Liquor and Licence Rules. Reliance was also placed upon another decision of the Punjab and Haryana High Court reported in CIT vs. Suraj Bhan Co. (1983) 37 CTR (P H) 284: (1983) 144 ITR 943 (P H) where the Punjab High Court held that mere fact that the partners of a firm indulging in certain speculative business, which activity is unlawful, would not make the firm non-genuine, dis-entitling the firm to registration under s. 185 of the IT Act. Reliance was also placed upon the following decisions of the Tribunal in respect of the assessee's contention: 1. Prem Prakash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 9: On the application in writing of all the original partners, a partner may, at any time, be removed in case of renewable licences, by the authority competent to renew the licence and in case of licences granted by auction by the Collector." Rule 5 contemplates that a licence can be granted to an individual, to a body incorporated under the Companies Act or a society registered under Punjab Co-operative Societies Act and also to a partnership and firm. Rule 7 clearly postulated that when a licence is granted to a partnership or a firm, all the individual, comprising all the partners of the firm should be specified in the licence. According to r. 5, licence can be granted to a partnership. It was under this rule that licences were granted to the persons named above. There is nothing brought to our notice prohibitting those persons from joining together as partners. In this context r. 8 becomes very significant. Now, r. 8 contemplates a case of admission of a new partner and r. 9 contemplates the removal or a retiring of a partner. When a new partner is to be admitted or an existing partner is to be retired, an application in writing, signed by all the persons in the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before us, all the four persons were licencees, even though in respect of two different shops. They were, therefore, entitled to possess liquor and a sell it. For this reason, we feel that the ratio of this case is not applicable to the facts before us for the reason that all the four partners ere were licensed by the Excise Authorities. We may also state that the Punjab and Haryana High Court in coming to the conclusion that the firm is not registrable, relied upon its earlier two Division Bench decisions in the case of CIT vs. Benarsi Das and Co. (1962) 44 ITR 835 (P H) and Lalchand Mohanlal Fazilka vs. CIT (1976)65 ITR 418(P H). The contention was raised that after the decision of the Supreme Court in the case of Jer and Co. vs.CIT (1971) 79 ITR 546 (SC) the earlier decisions of the Punjab and Haryana High Court must be deemed to have been impliedly over-ruled. Though, this argument was sought to be modified by pointing out the distinction between the case decided by the Supreme Court in Jer Company and the Punjab and Haryana High Court in the earlier decisions reported in (1962) 44 ITR 835 (P H) and Lalchand Mohanlal Fazilka vs. CIT (1967) ITR 418 (P H) yet the position rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's contentions because in this case, it was held, as we have mentioned earlier, that the mere fact that the partner of a firm had indulged in certain speculative business, which activity was unlawful, the firm would not become a non-genuine firm. In other words, registration can be refused to a firm only when the object of the partnership was opposed to the public policy, which renders the object unlawful. When such was not the position registration cannot be refused. We may add that under r. 7, all the individuals comprising the partnership must be specified in the licence. In this case two persons were shown as partners in respect of one shop, and the other two persons were shown as licencees in respect of the other shop. In other words this partnership business was being carried on under two licences which comprised all the four persons, by coming together to carry on the business of these two shops in partnership by pooling resources and to share the profits or losses. 7. For these reasons we are of the opinion that the registration had been erroneously cancelled by the Revenue and we direct that the firm should be granted registration. 8. In the result, this appeal is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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