MOTI LAL CHUNNILAL TAK Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The following questions of law arose for decision before the High court:

(2.) The facts of the case as stated by the High court are as under:

(3.) The question is whether the firm is entitled to registration even though it was constituted in violation of excise law and whether the Income Tax Officer could deny registration of the partnership firm under the Income Tax Act on the ground of public policy. These questions are now concluded by the judgment of this court in the case of Biharilal Jaiswal v. CIT. There the question was of registration of a firm in relation to a liquor licence. The licence was issued in the name of an individual. The condition of licence expressly prohibited formation of partnership in relation to the licence. In spite of this prohibition the licence-holder entered into a partnership. This court held that registration could not be granted to a partnership firm where the partnership agreement was prohibited by law. It was observed that one arm of law cannot be utilised to defeat the other arm of law. Doing so would be opposed to public policy and bring the law into ridicule. It will be wrong to think that the Income Tax Officer need not look to the general law relating to partnership while dealing with the question of registration under the Income Tax Act.