Excise licence in one partner's name did not invalidate partnership registration where no transfer or sub-letting was proved.

A partnership carrying on excisable business was not treated as illegal for income-tax registration where the licence stood in one partner's name but had neither been transferred nor sub-let. The licensed partner continued to manage the business on behalf of all partners and received remuneration for that role, so the arrangement was not hit by section 23 of the Bihar and Orissa Excise Act, 1915. On those facts, the firm remained eligible for registration under section 26A of the Indian Income-tax Act, 1922, and the reference was answered against the Commissioner of Income-tax.

---

---

Issues: Whether the assessee firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922, despite the contention that the partnership arrangement amounted to an unlawful transfer or sub-letting of an excise licence under the Bihar and Orissa Excise Act, 1915.

Analysis: The decisive question was whether the excise licence obtained in the name of one partner had in fact been transferred or sub-let to the firm. The partnership deeds provided that the licensed partner would manage the business on behalf of all partners and receive remuneration for that service. On the facts found, there was no transfer or sub-letting of the licence, and the Excise Act did not prohibit a partnership from carrying on excisable business so long as the person actually carrying on the business held the licence. The arrangement was therefore not hit by section 23 of the Bihar and Orissa Excise Act, 1915, and the partnership could not be treated as illegal for income-tax registration purposes.

Conclusion: The assessee firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922; the reference was answered against the Commissioner of Income-tax.

Final Conclusion: A partnership carrying on excise business is not invalid for income-tax registration merely because the licence stands in one partner's name, where the licence has neither been transferred nor sub-let and the licensed partner continues to manage the business.

Ratio Decidendi: Absence of actual transfer or sub-letting of the excise licence, coupled with management of the business by the licensed partner, preserves the validity of the partnership for registration purposes under the Income-tax Act.

---