WARASAT HUSSAIN MD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO brothers, Rahmat Ali and Liakat Hussain, held excise licences under their own names, but the business of all licensed shops were carried on jointly and assessments were made on the status of association of persons. After sometime the two brothers constituted a partnership under the name and style of Rahmat Ali on the basis of a partnership deed dated September 30, 1949, and they continued to carry on the said excise business on the licences held by them in their individual names as partners with equal shares. The income-tax department granted registration of the firm under section 26A of the Income-tax Act, 1922, for the year 1949-50. Renewal of the registration of the said firm was also granted in subsequent assessment years 1950-51, 1951-52 and 1952-53. Rahmat Ali died on December 27, 1951, and after his death the firm was reconstituted with effect from January 1, 1952, under the name and style of Liakat Hussain and a fresh partnership deed was executed on May 21, 1952, according to which Liakat Hussain held eight annas share and the two sons of Rahmat Ali, namely, Mohammad Warasat Hussain and Sheikh Hefazat Ali, 3 annas 6 pies each and Mosammat Bibi Majidan, widow of Rahmat Ali, held one anna share.

(2.) UNDER the provisions of the Bihar and Orissa Excise Act, 1915, the licences held under the name of Rahmat AH were transferred by the excise department to Mohammad Warasat Hussain and Sheikh Hefazat Ali, sons of Rahmat Ali, in their names and, as such, Bibi Majidan, one of the partners of the firm, did not hold any licence in her own name. The newly constituted firm carried on the said excise business in partnership and registration of the firm was again allowed by the income-tax department under Section 26A of the Income-tax Act for the assessment year 1952-53 for the accounting year January to March, 1952. Renewal of the registration of the partnership firm was allowed by the department for the subsequent assessment years 1953-54 and 1954-55.' Liakat Hussain died on August 7, 1953, and in his place his two sons, Mohammad Amanat Hussain and Mohammad Sharafat Hussain and his widow, Bibi Aliman, became the partners of the firm and the said Liakat Hussain firm was reconstituted with effect from September 1, 1953, under the name and style of Mohammad Warasat Hussain and a fresh partnership deed incorporating the terms of the firm was executed on September 1, 1953. As before, the licence of the shop held in the name of Liakat Hussain was transferred in the names of his two sons, Amanat Hussain and Sharfat Hussain. The relevant provisions of the partnership deed are as follows :

(3.) THE aforesaid provisions require that unless a person takes out a licence he is not competent to deal in excisable commodities. THE licence taken cannot be transferred or sub-let without the approval of the Collector or the Excise Commissioner, as the case may be. In the prescribed form of licences appended to the Bihar and Orissa Excise Rules made under the Act, the terms and conditions of a licence, amongst other things, provided that a licensee shall sell excisable articles at the place or on the premises prescribed for it, himself or on his behalf and not at any other place. THE: name of the person who would be selling the excisable commodities will have to be endorsed on the licence form in the writing of the licensee. A licence cannot be transferred or sub-let entirely or partially except with the previous permission of the Collector. THE licensee shall keep the reserved stock of excise articles which he is authorised to sell, sealed at the time of procuring packets and dibias and bottling liquor. THErefore, in this case, the case of the assessee was that the four male partners, i. e., the two sons of Rahrnat Ali and the two sons of Liakat Hussain, held licences in their names for various shops and the business of all the licenced shop was duly carried on under the responsibility of the licensees, vis-a-vis, the licence department. THEre is no evidence to the contrary that besides the four male partners, the two lady partners ever carried on the business of the licenced shops. THEir only case was that they contributed the capital and received proportionate amounts of profits of the business.