COMMISSIONER OF INCOME TAX Vs. WINE CHAMBER

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred by the Tribunal, Cuttack Bench (in short "the Tribunal"), under S. 256(1) of the IT Act, 1961 (in short "the Act"), to this Court for opinion :

(2.) THE background facts are that the assessee filed an application for registration claiming that it is entitled to registration in terms of S. 185 of the Act. The application was considered by the ITO, Keonjhar Circle (hereinafter referred to as "the Assessing Officer). The assessee's claim was that it was a firm consisting of two partners, viz, Shri Ramesh Chotolal Thacker and Sri Trilochan Singh, each having 50 per cent share in the profit and loss of the firm. The AO found that the business carried on by the assessee was sale of foreign liquor. He noticed that the name of Trilochan Singh was not endorsed in the licence issued for carrying on the business. He held that the licence was one issued under r. 118 of the Orissa Excise Rules, 1965 (in short "the Rules"), and refused registration on the ground that the name of Trilochan Singh was not endorsed in the licence. In support of his view, reliance was placed on a decision of the Punjab & Haryana High Court in CIT vs. Hardit Singh Pal Chand and Co. (1979) 8 CTR (P&H) 365 : (1979) 120 ITR 289 (P&H). In the appeal preferred by the assessee, the order of the Assessing Officer was, confirmed by the AAC, Cuttack Range, Cuttack. The assessee assailed the order of the first appellate authority before the Tribunal. The assessee's appeal was accepted as the Tribunal held that the refusal was not justified because the registration was to be granted notwithstanding the fact that the licence for selling liquor was issued to only one partner. The Tribunal relied on a decision of the Madhya Pradesh High Court in CIT vs. Kondra Durgaiya (1987) 21 CTR (MP) 164 : (1983) 143 ITR 315 (MP), and a decision of the apex Court in Jer & Co. vs. CIT (1971) 79 ITR 546.

(3.) MR . S. Ray, learned counsel for the assessee,however, submits that there is no restriction imposed by any statute prohibiting a licensee from entering into partnership arrangements, and, therefore, the decision of the Tribunal directing grant of licence is in order.