TaxTMI 
TaxTMI 
1968 (11) TMI 10
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....re as follows: The assessee firm was constituted under a deed of partnership dated the 4th December, 1958, and comprised of four partners, who had shares in the profits and losses of the business in equal proportion. The capital was fixed at Rs. 26,000, to be contributed equally by the partners. The preamble of the partnership deed provided as follows: (The first party mentioned in the preamble referred to Sri Nakul Chandra Mandal). " Whereas the parties have taken in the name of the 1st party licence of eight pachwai shops, viz., (1) Sitaramdera, (2) Sonari pachwai shop, (3) Monifit pachwai shop, (4) Haludboni pachwai shop, (5) Hargarghuttu pachwai shop, (6) Jugsalai pachwai shop, (7) Adityapur pachwai shop and (8) Mango pachwai shop all ....
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.... was illegal. This has given rise to Tax Case No. 49 of 1966 in this court. The two sections of the Bihar and Orissa Excise Act, 1915 (Act No. II of 1915), which govern the matter, run, as follows : " Section 22.-Grant of exclusive privilege of manufacture and sale of country liquor or intoxicating drugs.--(1) The State Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege-- (a) of manufacturing or supplying wholesale, or (b) of manufacturing and supplying wholesale, or (c) of selling wholesale or retail, or (d) of manufacturing or supplying wholesale and selling retail, or (e) of manufacturing and supplying wholesale and selling retail any country liquor or intoxicati....
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....inded the case for a fresh decision. After referring to several cases on the point including that of Commissioner of Income-tax v. K. C. S. Reddy of this court, the Appellate Tribunal stated thus : " Before deciding whether a valid partnership exists or not there has to be a proper finding of fact as to whether the excise licences obtained by N. C. Mandal have been transferred to the partnership. This is a matter which has to be determined not only on interpretation of the terms of the partnership deed but also with reference to the actual state of affairs as disclosed by the account books. Since neither the Income-tax Officer nor the Appellate Assistant Commissioner had adverted their minds to this aspect of the matter, we do not wish to ....
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....ng Messrs. N. C. Mandal & Company. Clause 10 of this deed stated thus : " 10. The first party shall manage the partnership business subject to general supervision of the other partners and by way of remuneration for the service to be rendered by the first party he shall be entitled to a salary of Rs. 200 (two hundred) per month in addition to his share of profit. " The Income-tax Officer refused registration under this deed by big order dated the 22nd February, 1961. It was held that the partnership deed was in contravention of the Excise Act as the licence had been taken in the name of Sri N.C. Mandal only and the partnership deed amounted to a lease of the licence which is prohibited under the Excise Act. The officer followed his old ....
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....ame of N. C. Mandal & Company. I do not think that this distinction makes any difference in the principle laid down by this court. The case in Commissioner of Income-tax v. K. C. S. Reddy was under the Bihar Mica Act, 1948, and it arose out of an application filed for registration under section 26A of the Income-tax Act. As held in that case, there is also no express prohibition in the Excise Act that a partnership cannot carry on business of dealing in excisable articles, provided, of course, the person who actually carries on the business has a licence. As will appear from clauses 7 and 10 of the two partnership deeds, the management of the business was left to Sri N. C. Mandal, and, therefore, it is difficult to hold that, in the instant....