TMI Blog1996 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... f the firm carrying on the business of vending liquor or abkari business, governed by the provi sions of section 14 of the Andhra Pradesh (Telangana Area) Abkari Act, 1316F (hereinafter referred to as "the Abkari Act"), during the relevant assessment year 1966-67 could be registered under the provisions of the Income-tax Act, 1961, when such sub-partnership was entered into without following the statutory provisions of section 14 of the Abkari Act. The said section lays down that the lessee of liquor business cannot take partners without prior permission of the Government. The Income-tax Officer refused registration holding that the sub-partnership contravened the aforesaid provision and hence, it was void and unenforceable, being formed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses accruing to or received by him from the main firm. The sub-partnership was not, therefore, in violation of section 14 of the Abkari Act. The aforesaid decision squarely covers the question in controversy before us. However, learned counsel for the Revenue vehemently contended that the said decision required reconsideration. He submitted that a Division Bench of this court consisting of one of us, B. P. Jeevan Reddy J. and B. N. Kirpal J., in Bihari Lal Jaiswal v. CIT [1996] 217 ITR 746 ; [1995] 6 Scale 508, had an occasion to consider the question whether the income-tax authorities were bound to register a partnership-firm which was contrary to the provisions of the State Excise enactment. In the aforesaid decision, it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership cannot be taxed. It is certainly bound to be taxed either as an unregistered partnership firm or as an association of persons. " It was further contended that the decision of this court in Degaon Ganga Reddy's case [1995] 214 ITR 650 had assumed that the sub-partnership was only to finance the business of a partner but the court had not considered the moot question whether such sub-partnership was merely a loan transaction or a financial agreement and if it was merely a financial agreement whether it could ever constitute a partnership within the meaning of section 4 of the Indian Partnership Act, 1932, which reads as under : " 'Partnership' is the relation between persons who have agreed to share the profits of a business car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re partners in the main abkari business. He also vehemently contended that if such sub-partnerships are treated to be legal and valid and are held to be entitled to registration under the Income-tax Act then a situation would arise wherein the main partners in the abkari business would enter into such devices and can divert the profits of abkari business bypassing the provisions of section 14 of the Abkari Act. In our view, this is a matter which should properly be considered by a Bench of three learned judges so that an authoritative pronouncement is made on the question arising herein. The papers may be placed by the Registry before the Hon'ble Chief Justice for placing this matter before a Bench of three learned judges. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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