COMMISSIONER OF INCOME TAX Vs. HOTEL NEW INDRAPRASTHA

JUDGEMENT

(1.) The question raised in the connected appeals filed by the Revenue is whether the Assessees which are partnership firms running bar hotels with a single bar licence obtained from the Excise Department in the name of only one of the partners, are entitled to registration as a firm or could be regarded as genuine firm under Section 185 of the Income-tax Act, 1961 for the purpose of assessment in the status of registered firm/firm. We have heard standing counsel appearing for the Appellant and senior counsel Sri V. Ramachandran and advocate Sri P. Balakrishnan appearing for the Assessee-firms.

(2.) There is no controversy on the facts inasmuch as all the Assessee-firms carried on retail business in liquor in the bar hotels run by them with a single abkari licence (FL-3) obtained by one of the partners and the other partners did not have separate individual licences issued by the excise authorities. While counsel for the Revenue relied on earlier three-member Bench decision of the Supreme Court in Bihari Lal Jaiswal v. CIT, 1996 217 ITR 746 , counsel for the Assessees relied on the later judgment of the Supreme Court in CIT v. Rangila Ram, 2002 254 ITR 230, which was rendered on December 4, 2002 by a two-member Bench. The later decision of the Supreme Court does not refer to the earlier three-member Bench judgment and so much so, standing counsel for the Revenue contended that the earlier judgment referred to above should be taken as the law declared by the Supreme Court and if the same is followed, liquor business in bar hotels carried on by a firm with several persons without licence obtained by all the partners should be treated as illegal business disentitling the partnership for registration under Section 185 of the Income Tax Act and such firms cannot be treated as even genuine firms for assessment in the status as firm.

(3.) On going through the above two judgments of the Supreme Court, we find that detailed provisions of the Abkari Act and Rules are not stated in the three-member Bench decision, whereas in the later decision of the two-member Bench, the provisions of the Kerala Abkari Act and Rules are referred to and the decision is rendered in the context of the abkari laws of Kerala. However, we do not think there is any need for us to consider which of the above two decisions should be followed in these cases because for the reasons stated hereunder. We are of the view that the Assessee-firms are entitled to registration under Section 185 and are entitled to be treated as genuine firms which carried on liquor business in bar hotels in accordance with the provisions of the Abkari Act and Rules, no matter the licence was obtained only by one of the partners of the firms which carried on the business.