9911796707
TMI Blog1996 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... l, Indore, has referred the undernoted question for our opinion : " Whether, on the facts and in the circumstances, the Tribunal is justified in law in holding that the firm was liable to be assessed as a registered firm in respect of the assessment years under consideration ? " The facts lie in a narrow compass. The assessee is a firm. It came into existence for the first time for the accounting period beginning on April 1, 1975, and ending on March 31, 1976, with 17 partners constituting it. The said partnership was evidenced by a deed of partnership dated September 15, 1975. For the financial year 1975-76, the firm was granted an excise licence for the Ujjain group of country liquor shops in an auction held in February, 1975. In Februa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -78, 1978-79 and 1979-80. Aggrieved, the Revenue filed appeals. The accountant member held that it was a case of change and not of a new firm and sustained the order of the Commissioner of Income-tax (Appeals). The Judicial Member differed from the view of the Accountant Member and held that it offended rule VI of the M. P. Excise Rules and thus reversed the order of the Commissioner of Income-tax (Appeals). The matter was then referred to a Third Member under section 255(4) by the President of the Tribunal as a result of difference of opinion between the Accountant Member and the Judicial Member on the crucial question of the nature of the firm. The Third Member agreed with the opinion of the Accountant Member. The Bench in conformity with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the licence. A partner, sub-lessee, or transferee shall be bound by all the conditions of the licence, but the original licensee shall also continue to be responsible to the State Government for the due payment of the licence fee and proper working of the shop. " There is a ban against sale, transfer or sub-lease of privilege of supply or sale and against entering into a partnership for the working of such a privilege in any way or manner without the written permission of the Collector to be endorsed on the licence. Rule I also mandates that every licence shall be deemed to have been granted to the person named therein. What, however, emerges in the instant case is chronicled below : (a) The licence was granted to the firm and not to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapman and Co. [1982] 135 ITR 620 (SC) it is held that : " It cannot be disputed that ' dissolution ' and ' reconstitution ' are two distinct legal concepts, for, a dissolution brings the partnership to an end while a reconstitution means the continuation of the partnership under altered circumstances. " The Full Bench of the Allahabad High Court in the case of Vishwanath Seth v. CIT [1984] 146 ITR 249, through majority opinion, held that " reconstitution without dissolution does not bring into existence a new firm. In the case of reconstitution, the same firm continues to exist ". The same view was expressed by, the Calcutta and Madras High Courts in Sohanlal Pachisia and Co. v. Bilasray Khamani AIR 1954 Cal 179 and Meenakshi Achi v. P.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose sympathetic and imaginative discovery is the surest guide to their meaning." A subject in a free country does not deserve to be lugged into pettifoggery and registration, once granted, is not liable to be incinerated without proof of dissolution of the firm and thus change of identity. Some sort of personality and identity is conceded to a firm in the matter of suing or being sued even under Order XXX, rule 1 of the Code of Civil Procedure. It is a trite position that the subject should not be taxed by ignoring the legal position. The House of Lords expressly reaffirmed the basic principle." A subject is entitled to arrange his affairs so as to reduce his liability to tax ". Now if in the instant case the firm permitted exclusion or i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
