COMMISSIONER OF INCOME TAX Vs. GRAND ENTERPRISES

JUDGEMENT

(1.) The following questions of law were referred at the instance of the Revenue:

(2.) The respondent assessee is a partnership firm consisting of three partners running a hotel and a bar". The licence for running the bar was granted to one of the partners, Shri K. J. Joseph. The said licence was utilised For running the bar. The firm is a registered firm with the Income Tax Department. But their continuance of registration for the assessment years 1983-84, 1986-87 and 1990-91 was refused by the assessing officer on the ground that the bar licence was in the name of one of the partners and not in the name of the firm, though the firm was carrying on the business without the proper transfer of licence. Following the decision of the Tribunal, Cochin Bench in M/s Narayanan and Co., Edappally in I.T.A. No. 155 / Coch / 1985, dated 30th April 1989, the assessing officer held that the assessee was not entitled to registration under the Income Tax Act, in view of the violation of the Abkari Regulations. On appeal, the Commissioner (Appeals) following the decision of the Special Bench of the Tribunal (Cochin Bench) in M/s Raveendra Engineering Construction Co. 198 ITR 32 allowed the appeals of the assessee. On further appeal by the Department before the Tribunal, the order of the Commissioner was upheld. The present reference was therefore made at the instance of the Department.

(3.) Learned Senior Counsel appearing on behalf of the Department submits that in the light of the Full Bench decision in Narayanan and Co. v. C.I.T. (Kerala) (F.B.) (1997) 223 ITR 299 the question has to be answered in favour of the Revenue. It is further contended that the assessee firm does not possess any licence to run the Abkari business which is a clear violation of S.15 of the Abkari Act. According to the counsel, the order of the Tribunal in I.T.A. No. 155 / Coch / 1985 which was followed by the assessing officer is confirmed by the Full Bench and hence the reference must be answered accordingly.