D MOHIDEEN SAHIB AND CO EXCISE CONTRACTORS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that has been referred to us for our opinion is as follows :

(2.) IT has been held by a recent decision of a Full Bench of this Court in Velu Padayachi v. Sivassooriam Pillai, C. R. P. No. 232 of 1947; that a partnership entered into for the purpose of conducting a business in arrack or toddy on a licence granted, or to be granted, to only one, or some of the partners, is void ab initio whether the partnership contract was entered into before the licence was granted or afterwards. The reason for this conclusion is stated to be that such a partnership arrangement either involves a transfer of the licence which is prohibited under Rule 27 and punishable under Section 56, or is a breach of Section 15 Abkari Act punishable under Section 55 because the unlicensed partner, by himself, or through his agent the other partner, sells without a license, The learned Judges also held that even though a partnership was lawful at its inception because it was not intended to infringe any of the provisions of the Contract Act, it nevertheless, became unlawful when it intended to conduct the business jointly on a licence granted to one only of the partners In view of this opinion we must hold that the object of the partnership was illegal and therefore the partnership contract itself was void ab initio. That being the case it was open to the Income-tax Officer to refuse to register a firm whose object was unlawful and the partnership contract under which the firm was constituted was wholly void. We therefore answer the question referred to us in the affirmative and against the assessees. The Commissioner of Incometax will get his costs of this reference which we fix at Rs. 250.