Excise partnership with unlicensed relatives upheld where licence conditions were not breached and no transfer of licence occurred.

A partnership formed by licensed excise dealers with relatives who held no excise licence was not invalid merely on that account. The court noted that the unlicensed partners did not handle, possess, or sell excisable goods, and the licensed partners remained responsible to the excise authorities. Mere participation in management or sharing profits did not, by itself, amount to transfer, assignment, or sub-lease of the licence. As the arrangement did not violate the Bihar and Orissa Excise Act, 1915 or licence conditions, the firm was treated as a genuine partnership and was entitled to registration under section 26A of the Income-tax Act, 1922.

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Issues: Whether a partnership constituted by licensed excise dealers together with relatives who held no licence was invalid under the Bihar and Orissa Excise Act, 1915, so as to disentitle the firm to registration under section 26A of the Income-tax Act, 1922.

Analysis: The partnership deed allowed the business to be carried on jointly, but there was no evidence that the unlicensed lady partners ever handled, possessed, or sold excisable goods. The licence-holders remained the persons responsible to the excise authorities, and mere participation in management or sharing of profits did not by itself amount to transfer or sub-lease of the licences. The relevant excise provisions prohibited dealing without licence and prohibited transfer or assignment of the exclusive privilege without approval, but they did not contain an express bar against the formation of a genuine partnership with persons who themselves did not hold licences, so long as the licensed partners continued to carry on the business in accordance with the licence conditions.

Conclusion: The partnership was not illegal and did not contravene the Bihar and Orissa Excise Act, 1915; the firm was entitled to registration under section 26A of the Income-tax Act, 1922.

Ratio Decidendi: A partnership for carrying on an excise business is not invalid merely because some partners do not hold excise licences, unless the arrangement amounts in substance to a transfer of the licence or otherwise violates the licence conditions or the excise statute.

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