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TMI Blog1984 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ing partners: 1. Shri Madho Lal Tak 2. Shri Ram Pratap Tak. 3. Shri Norat Mal Tak. 4. Shri Heera Lal Tak. 5. Shri. Ram. Lal Tak. 6. Shri Ramdeo Tak. 7. Shri Hemchand Tak. 8. Shri Dolat Ram Tak. 9. Shri Pannalal Tak. 10. Shri Mishri Lal Rajput. 11. Shri Ram Swaroop Kumawat. 12. Shri Bhanwar Lal Rajput. 13. Shri Durga Lal Kumawat. 14. Shri Santoshi Lal. 15. Smt. Bali Bai. This firm was constituted to carry on the business of sale of country liquor. , Four licences Nos. 2(a), 2(b), 2(c) and 2(d) were issued under s. 42 of the Rajasthan Excise Act authorising the sale of country liquor in the joint names of the following persons: 1. Shri Heeralal Tak. 2. Shri Ram Lal Tak. 3. Shri Hemchand Tak. 4. Shri Dolat Chand. These four persons joined with other 11 persons so as to form a partnership firm consisting of 15 persons named above so as to overcome the difficulty of shortage of finances and to reduce the burden of losses, if any, in the business and to pool the resources and start the partnership business. The agreement materialised and the firm started functioning from 1st April, 1965, and carried on the business of selling country liquor for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Appellate Tribunal after hearing the parties referred the above question for our opinion. We have heard Shri N. K. Jain for the assessee and Shri R. N. Surolia for the Department. The learned counsel for the Department has placed reliance on CIT v. Krishna Reddy & Co. [1962] 46 ITR 784 (AP), a decision of the Andhra Pradesh High Court, in which case a licence for carrying on abkari business under the Hyderabad Abkari Act was issued in the name of K without obtaining the prior approval of the Talukdar as required by the Act. K entered into partnership with A.. It was held that the partnership with A was in contravention of law and was void but as the partners had joined with the common purpose of earning profits, they were assessable as an AOP on the profits made. The facts of this case are exactly identical with the facts of the present case and, therefore, the Income-tax Appellate Tribunal was right and justified in relying on this authority. The learned counsel for the Department also placed reliance on two decisions of the Madhya Pradesh High Court in CIT v. Pagoda Hotel and Restaurant. [1974] 93 ITR 271, wherein it was held that since in the Excise Rules there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Privy Council in Govardhan Das Kesshowji v. Chamsey Dassa [1921] AIR 1921 PC 137, wherein the Privy Council had held that a licensee of salt manufacture cannot be said to have contravened the terms of his licence whereby he is prohibited from alienating his interest simply because he admits members of his family and others as partners and had relied on two decisions of the Patna High Court in CIT v. Prakash Ram Gupta [1969] 72 ITR 366 (Pat) and Md. Warasat Hussain v. CIT [1971] 82 ITR 718 (Pat), wherein it has been held that in a cause where a licensee entered into a partnership with a non-licensee, mere formation of a partnership does not amount to transfer of licence. The decision of the Allahabad High Court in Jer & Co. v. CIT [1966] 60 ITR 335 has, been overruled by the Supreme Court in the case reported in Jer & Co v. CIT [1971] 79 ITR 546 (SC) and held that the licensee is not prohibited from entering into a partnership. It merely provided that the licence shall not be sub-leased or transferred and there was no prohibition in the licence against the holder entering into partnership and, therefore, the partnership was legal and the appellant was entitled to reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-firm who had individually advanced moneys to one S took over two buses standing in the name of S together with the route permits in part payment of the moneys due to them and the firm carried on the business of running the buses. Under an agreement entered into with the partners, S had agreed to make over the buses with the route permits and had also undertaken to apply to the motor vehicles authorities concerned for the transfer of the route permits in favour of the partners. The claim of the assessee-firm for registration under s. 185 of the I.T. Act, 1961, was rejected by the officer in the view that, the firm was exploiting the route permits granted to S in an illegal manner without getting the route permits transferred in its own name. The AAC, however, directed grant of registration. The Appellate Tribunal in the appeal by the Department reversed the order of the AAC. In the reference at the instance of the assessee, the High Court held that the firm was entitled to registration under the I.T. Act, 1961. Lastly, he placed reliance on CIT v. Manick Chandra Dey [1977] 106 ITR 860 (Cal), in which it was held that the provisions of the Control Order did not prohibit e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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