BADRI VISHAL JARIYA AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference has been made under S. 256(1) of the IT Act, 1961. The following question has been referred to for decision :

(2.) THE question referred arises on the following facts. The reference relates to the assessment for the period 1972-73. In the aforesaid period Badri Vishal Jariya had obtained a licence for dealing in country liquor under the provisions of M.P. Excise Act. Soon after grant of licence in his favour for dealing in country liquor a partnership firm was constituted by deed dt. 1st Jan., 1971 consisting of Badri Vishal Jariya himself as a partner with 6 other partners. The business of country liquor was transferred by Badri Vishal Jariya to the firm. On 9th April, 1971, an application was made to the District Excise Officer for permission to transfer the licence in favour of the partnership firm. The matter was duly forwarded by the District Excise Officer on 17th Dec., 1971 to the Excise Commissioner, Gwalior. An application was made to the ITO, Sagar, on 29th March, 1972 under s. 185 of the Act for registration of the firm. The ITO by order dt. 10th Feb., 1976 refused to grant registration to the firm on the ground that the Collector had not permitted transfer of the licence in favour of the firm in accordance with provisions contained in M.P. Excise Act and Rules framed thereunder. The AAC also by order dt. 4th Nov., 1977 maintained the order of ITO rejecting the registration of the firm. The petitioner took up the matter in second appeal before the Tribunal, Jabalpur Bench. In the meantime, by communication dt. 2nd Feb., 1979, the Collector granted the necessary permission for transfer of licence in favour of the partnership firm. The aforesaid fact was brought to the notice of the Tribunal yet the learned Members of Tribunal by order dt. 14th Feb., 1979 refused to grant registration to the firm under the provisions of S. 185 of the Act. It is against the aforesaid order of the Tribunal that this reference has been made at the instance of the assessee.

(3.) WE have also heard learned counsel Shri V.K. Tankha appearing for the Department who made an attempt to distinguish that decision on the ground that on the date the registration was claimed and rejected both by the ITO and appellate authority, there did not exist any permission of the Excise Department for transfer of liquor licence. It is argued that the grant of permission subsequently can be of no avail to claim registration at the stage of the case in the Tribunal.