SETHI WINE STORES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following questions of law have been referred to this court for its opinion, by the Income-tax Appellate Tribunal, Indore Bench, Indore, under Section 256(1) of the I.T. Act, 1961, at the instance of the assessee :

(2.) THE facts of the case as per the statement of the case submitted by the Tribunal may be stated thus : A deed of partnership was executed on June 23, 1961, in the name of M/s. Pagoda Hotel & Restaurant, in which Shri Ramlal Sethi, Vikramjit Sethi, Inderjit Sethi were equal partners with equal shares. THE said partnership was made effective from June 16, 1961. This firm had two activities, of which one was of running hotel and restaurant known as Pagoda Hotel & Restaurant and the second was running of wine shop in the name of "M/s. Sethi Wine Stores", Hamidia Road, Bhopal, dealing in foreign liquor. M/s. Sethi Wine Stores was run as a branch of M/s. Pagoda Hotel & Restaurant. THE return was filed in the name of M/s. Pagoda Hotel & Restaurant showing the income from the hotel business as well as the wine business and the status claimed was that of a registered firm. THE assessing ITO for the assessment years 1962-63 to 1965-66 noted that since the licence for running the wine business was in the name of Ramlal Sethi, no legally constituted firm came into existence because of Rule 6 of the Excise Rules as framed by the M.P. State Government, according to which no transfer or sub-letting of the licence would be permissible without the written permission of the Collector. THE ITO, therefore, rejected the claim for registration by the assessee and assessed the income from both the wine and hotel business in the status of an AOP (Association of persons).

(3.) THIS court answered the question as under :