TMI Blog1978 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... Hardev Singh, Mehar Singh, Rehman Singh, Ramji Dass, Maharaj Krishan, and formed a partnership-firm known as M/s.Hardit Singh Pal Chand Co., Wine Contractors, Sirhind. The firm applied for registration with the income-tax authorities under ss. 184 and 185 of the I.T. Act, 1961 (hereinafter referred to as " the Act " ). The ITO denied registration. On appeal, the Tribunal allowed the registration. The CIT sought the following question to be referred to this court, which the Tribunal did : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing registration to the firm ? " As would be clear from the order of the Tribunal on the appeal of the respondent-assessee, it concluded the case against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngers. The condition referred to in the licence merely provided that the licence shall not be subject to transfer. It was held that since the licence carried no prohibition against the holder thereof entering into a partnership with strangers, the question whether the partnership was illegal did not arise. It has been maintained by the learned counsel for the revenue that the provisions of the Excise Act and the Rules, which shall be presently mentioned, clearly prohibit the possession of liquor and its sale by any person other than a licensee and that the licence granted in Form'L' carries an express condition which provides that the licence is granted subject to the provisions of the Punjab Liquor Licence Rules, thus importing all the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Orders or these rules, in which case he shall be responsible for all obligations incurred or to be incurred under the licence during the period of its currency as if it had originally been granted or renewed in his name. Sub-rule (26) of r. 37 prohibits the licensee from allowing any person to conduct sales in his behalf unless the name of such person has been previously submitted to the Collector for approval and endorsed by him on the licence. The sum and substance of the provisions of the Excise Act and the Rules extracted above is that no person shall possess beyond the permissible quantity of intoxicant, i.e., liquor for consumption or sale without licence. If the licensee is a firm, it is prohibited from taking a new partner with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttracted and these have been rightly followed by the ITO and the AAC. The assessee-respondent had, at one stage or the other, also relied upon CIT v. K. C. S. Reddy [1960] 38 ITR 560 (Pat) and Oudh Cocogem and Provision Stores v. CIT [1968] 69 ITR 819 (All). The facts and situations involved in these two cases are entirely different and these two cases are clearly distinguishable on that account. In these cases, it was clearly held that the firm did not engage in any illegal activity. Mr. D. N. Awasthy, learned counsel, in all fairness brought to our notice the Division Bench decision in CIT v. Gian Chand Co. [1973] 87 ITR 113 (Punj), not because of its direct bearing on the present case but because of an obiter dicta to the effect th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT on behalf of the revenue. Reliance was placed on the two Division Bench decisions of this court reported in Benarsi Das and Company's case [1962] 44 ITR 835 and Lalchand Mohan Lal Fazilka's case [1967] 65 ITR 418. It was pointed out that the decisions pertain to opium licences and then it was observed in passing that the correctness thereof had been put in jeopardy by the Supreme Court decision in Jer Co.'s case [1971] 79 ITR 546 (SC). To the extent the Bench relied on ley Co.'s case [1971] 79 ITR 546 (SC), it was right in that like in Jer Co.'s case the licence contained no conditions prohibiting the licensee from entering into partnership. There was no rule in the Punjab Fisheries Rules prohibiting the licensee from entering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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