COMMISSIONER OF INCOME TAX Vs. KONDRA DURGAIYA

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal under Section 256(1) of the I.T. Act, 1961, referring, for our answer, the following question of law:

(2.) THE facts briefly stated are that certain excise contracts were taken by Kondra Durgaiya in the account year ending on March 31, 1970, relevant to the assessment year 1970-71, in Madhya Pradesh and Orissa. A partnership deed was executed on May 15, 1969, making it effective from February 1, 1969, in which Kondra Durgaiya took three adult partners and one minor was admitted to the benefits of the partnership. THE firm applied for registration which was granted by the Tribunal for the business carried on in Orissa. THE registration was refused for the business carried on in Madhya Pradesh on the ground that the partnership contravened Rule 6 of the Rules relating to General Conditions of Licence made under the Madhya Pradesh Excise Act, 1915. THE Tribunal held that Section 23 of the Bihar and Orissa Excise Act was not contravened by entering into the partnership and, therefore, the partnership in so far as the Orissa business was concerned, was not illegal and could be registered.

(3.) BEFORE concluding, we may state that the consistent view of this court with reference to Rule 6 of the Rules relating to General Conditions of Licence made under the M.P. Excise Act is that a partnership entered into without the permission of the Collector for working the business of a licence for the sale of liquor granted under the Excise Act is illegal. This view, however, proceeds on the language of Rule 6, which expressly prohibits entering, into partnership without the permission of the Collector [see CIT v. Shantilal Mehta & Co., M.C.C. No. 326 of 1976, decided on 18th July, 1980, [1983] 143 ITR 308 (HP) (supra)].