COMMISSIONER OF INCOME-TAX, M.P. II BHOPAL Versus MESSRS GUPTA S CO.
ORDER
G. P. SINGH, C.J. ‑‑This is a reference made by the Income‑tax
Appellate Tribunal referring for our answer the following question of law:
"Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in upholding the order of the Appellate Assistant Commissioner, allowing the claim of registration of the assessee following the Appellate Tribunal's order In the case of Messrs Kondra Durgaiya in I.‑T.A. No. 797 (Nag.)/1977/78, dated 15‑9‑1975."
2. The facts briefly stated are that excise contracts of four liquor shops were taken in the State of Orissa in the name of two partners oft the assessee firm. The assessee firm derived income from those expensive contracts in the account year relevant to the assessment year 1974‑75. The assessee firm applied for registration. The registration was refused by the I.‑T.O. on the ground that the excise contracts were not transferable having been obtained in the names of two out of four partners of the firm. It was further held that the formation of the partnership in respect of such non‑transferable licences was in contravention of law. The basis of the decision to refuse registration was the Madya Pradesh Excise Act and the Rules made thereunder. The view taken was that as the head office of the firm was in Madhya Pradesh, the laws of Madhya Pradesh were applicable. The Appellate Assistant Commissioner set aside the order of the I.T.O. and granted registration. The order of the Appellate Assistant Commissioner was upheld by the Tribunal. The Tribunal took the view and, in our opinion, rightly that as the excise contracts were to be worked in the State of Orissa, it is the law of that State which will decide whether the contracts were transferable and whether the taking of partners by a licensees was prohibited. The Tribunal had expressed the same view, in Messrs Kondra Durgaiya's case, which was approved by this Court. The judgment of this Court is now reported as Commissioner of income‑tax v. Kondral Durgaiya (1981) 21 Cur Tax Rep 164: (1982 Tax L R 567) (MP). It was held by the High Court in that case that simply because the head office of the firm was in Madhya Pradesh, the Madhya Pradesh Excise Act and the Rules made thereunder were not applicable and the liquor contracts having been taken in the State of Orissa. It was the law in force in that State which governed the transferability of the contracts. It was also held that the excise law in force in Orissa State did not prohibit a licensee from taking partners for working the licences.
3. For the reasons given above, we answer the question as follows:‑
"The Appellate Tribunal was right in law in upholding the order of the Appellate Assistant Commissioner allowing the claim of registration of the assessee."
There will be no order as to costs.
M.B.A. Answered in the affirmative.