1980 (11) TMI 4

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..... by Kondra Durgaiya in the account year ending on March 31, 1970, relevant to the assessment year 1970-71, in Madhya Pradesh and Orissa partnership deed was executed on May 15, 1969, making it effective from February 1, 1969, in which Kondra Durgaiya took three adult partners and one minor was admitted to the benefits of the partnership. The firm applied for registration which was granted by the Tribunal for the business carried on in Orissa. The registration was refused for the business carried on in Madhya Pradesh on the ground that the partnership contravened r. 6 of the Rules relating to General Conditions of Licence made under the Madhya Pradesh Excise Act, 1915. The Tribunal held that s. 23 of the Bihar and Orissa Excise Act was not c .....

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..... Commissioner. (3) The lessee or assignee shall not exercise any rights as such unless and until the Collector has, upon his application, granted him a licence to do so." A look at s. 23 will go to show that the prohibition contained therein does not in terms include a prohibition for entering into a partnership. In Dayabhai Co. v. CIT [1966] 59 ITR 364 (MP), a Division Bench of this court held that where the relevant statute does not prohibit a licensee or a permit-holder from taking a partner but simply prohibits a transfer or a sub-lease of the licence or the permit, then the licensee or the permit-holder, by merely admitting a partner or partners in the business to which the licence or the permit relates, does not transgress the pr .....

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..... ), the Patna High Court again held that where the licence for trading in liquor stood in the names of only some of the partners of a firm and was not transferred to the firm, there was no illegality in the partnership. But if the licence itself is transferred to the partnership, there would result an assignment of part of the licence and s. 23 would be contravened. In the instant case, there is no finding recorded by the Tribunal that the licence was transferred to the partnership. The re is also no material from which such a finding could have been given. The partnership, therefore, did not contravene s. 23. As the business carried on in Orissa by the partnership was distinct from the business in Madhya Pradesh, the partnership was entitle .....

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