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TMI Blog1967 (3) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... gister the firm because, although, admittedly, the opium contracts were in the name of Messrs. Lal Chand Mohan Lal at Malout and Fazilka, the business was actually carried on by all the seven partners. On appeal, the Appellate Assistant Commissioner set aside the order of the Income-tax Officer and directed that the firm be registered. He was of the opinion that whatever the position inter se among the partners might be, so far as the excise authorities were concerned, Messrs. Lal Chand Mohan Lal would be held responsible for all the dues and liabilities under the rules by the excise authorities. The department appealed to the Appellate Tribunal. The Tribunal examined Kishori Lal, one of the partners, and was satisfied that the persons who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), which was made a part of the case. It is expressly stated therein that all the seven partners agreed to carry on the business of sale of opium and poppy heads in the name and style of Messrs. Lal Chand Mohan Lal at Fazilka and Malout in partnership. Article 2 of the agreement was : " The partnership shall carry on business of sale of opium and poppy heads." There was nothing in the deed of partnership to show that any of the partners was merely a financing or a sleeping partner and was not to actively participate in the business of sale of opium and poppy heads. In Benarasi Das Company's case a Division Bench of this court, of which the judgment was delivered by me, held that where a person obtained a licence for the sale of opium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dewan, who appears for the assessee, has canvassed the correctness of the previous decision of this court and according to him, the following matters were either overlooked or not considered in their proper perspective : (a) There is no prohibition in the Opium Act or the rules made thereunder called " The Punjab Opium Orders " promulgated by Gazette notificatiou dated 14th July, 1956, against formation of a partnership for carrying on the business of sale of opium and poppy heads and, therefore, the partnership which was formed in the present case was on the face of it legal. (b) Condition (t) in rule 40 permits the licensee to conduct sales on his behalf by previously obtaining the approval of the Deputy Excise and Taxation Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm could not be regarded as illegal, nor could such a partnership agreement be held to be void as against public policy. The decision of the Madras, Andhra Pradesh and Kerala High Courts that a partnership entered into for the purpose of conducting a business on a licence granted or to be granted to one of the partners was void ab initio if the statute under which the licence was granted prohibited a transfer of the licence, was regarded as no longer correct in view of the decision of the Supreme Court in Umacharan Shaw Bros. v. Commissioner of Income-tax. The Madhya Pradesh Bench, however, pointed out that there was nothing in the Motor Vehicles Act which required a partner as such to take out a licence for carrying on the business and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sublet by the holder thereof without the permission of the appropriate authority. The question which was being decided by their Lordships was not the same as the one which has been referred to us. Indeed, in that case, though the Tribunal had stated that it had not proceeded on the ground that the partnership was illegal being against the Bengal Excise Act, the argument was referred to as supporting the conclusion that the firm was not genuine. It is not possible to see, with respect, how the Madhya Pradesh High Court considered that the Madras, Andhra Pradesh and Kerala decisions would no longer be good in view of what has been observed in Umacharan Shaw's case . It is, however, difficult to see how the decision of the Madhya Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence provided he is otherwise eligible. Rules 56 and 57 are to the effect that, on the application in writing of all the original partners, a partner may at any time be removed by the authority competent to grant the licence and that a licence granted to a partnership is determined by the dissolution of the partnership, etc. All these provisions indicate that the relevant statutory provisions contemplate a partnership carrying on the business of sale of opium only if a licence is taken in its name and if it is proposed that certain or all the partners should actively carry on business. The rules which have been mentioned must be complied with. The reference to the instrument of partnership in the present case, as has been noticed at an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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