Indian Kanoon - Search engine for Indian Law

(5) On the facts and circumstances of the case, the Ld. CIT(A), Cuttack had also erred in applying the ratio of jurisdictional High Court in the case of CIT -v- Wine Chamber (195 ITR 195) in spite of the fact that it relates to Rule-18 of Board's Excise Rules, 1965 framed in exercise of powers conferred by section 90 of Bihar and Orissa Excise Act, 1915.

(6) On the facts and circumstances of the case, it is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer may be restored.

11 Operative part of the judgment in the case of CIT vs. Wine Chamber (supra) is reproduced as under for ready perusal :-

Where there is no prohibition for the holder of a licence for trading in liquor from entering into partnership arrangements, he can validly enter into partnership, and such partnership is legal and is entitled to registration. Under the provisions of section 23 of the Bihar and Orissa Excise Act, 1915, what is prohibited is the letting or assigning of the licence or permit, or any portion thereof without being expressly authorized. Rule 122 (2) of the Board's Excise Rules, 1965, deals with restrictions on the appointment of salesmen. The object of a partnership is always to carry on business. The expression "business" includes several activities out of which sale is one.

" The decision of the apex court in Jer and Co.'s case [1971] 79 ITR 546 is an authority for the proposition that, where there is no prohibition for the holder of licence from entering into partnership arrangements, he can validly enter into partnership. and such partnership is legal and is entitled to registration. The Madhya Pradesh High Court in Kondra Durgaiya's case [1983] 143 ITR 315, considered the provisions of the Orissa Rules. Referring to section 23 of the Bihar and Orissa Excise Act, 1915, it was held that there is no contravention thereof if the holder entered into partnership arrangements. What is prohibited by section 23 is letting or assigning the licence or permit, or any portion thereof without being expressly authorised. In the instant case, there was no letting or assigning. The view of the Patna High Court in Md. Warasat Hussain v. CIT/1971] 82 ITR 718 and CIT v. Narpati Khan and Co. [1974] 97 ITR 645 that where the licence for trading in liquor stood in the names of only some of the partners of a firm and was not transferred to the firm, there was no illegality in the partnership. But where the licence itself is transferred to the partnership, it may result in an assignment of part of the licence, and section 23 may come into force. In the instant case, it is ITA Nos.460, 461,386&387/CTK/2019 & ITA Nos.111&112/CTK/2020 accepted that the licence continued to stand in the name of Ramesh Chotolal Thacker."

Ground No.5 : On the facts and in the circumstances of the case, the Ld.CIT(A), Cuttack was not justified in relying on the ratio of judgement passed in the case of CIT vs. Wine Chamber [1992] 195 ITR 195 (Orissa), which was rendered in the context of Rule- 18 of Board's Excise Rules, 1965 framed in exercise of the powers conferred by section 90 of the Bihar and Orissa Excise Act, 1915, The provisions of Mining Concession Rules, 1960 are different from Board's Excise Rules, 1965, Hence, the CIT(A) should not have granted relief to the assessee based on the decision of Orissa High Court rendered in the context of Rule-18 of Board's Excise Rules, 1965, In any case, the ratio of the above decision no longer holds field after the Supreme Court's decision in the case of Bihari Lal Jaiswal and others v CIT (1996) 217 ITR 746 (SC), wherein it has been held that if license conditions prohibits transfer/sublet of license, any violation thereof cannot be allowed to grant benefit.