Law: Income Tax Act, 1922

Section: 26-A

Income-tax-Firm-Registration-Partnership of three persons carrying on sale of wines and other businesses also-Licence for sale of wines in one partner's name-Whether partnership wholly void and registration can be refused - Indian Income-tax Act, 1922, S. 26-A. The assessee-firm consisting of three partners carried on business in selling provisions, medicines and wines and was registered for some years under the Income-tax Act. The Commissioner, finding that the licence for the sale of wines stood in the name of one of the partners and that a partnership of more than two partners was prohibited from selling wines by the U. P. Excise Rules, cancelled the registration holding that the deed of partnership was void. Held, that the mere fact that the selling of wines by the partnership was illegal did not make the partnership itself void or illegal, and cancellation of the registration on the ground that the partnership deed was void was wrong. As the deed of partnership was not void and a firm constituted under the deed was in existence, the firm was entitled to be registered under section 26-A. Lalchand Mohan Lal Fazilka v. Commissioner of Income-tax (1967) 65 I T R 418; Pickering v. Ilfracombe Railway Company (1968) L R 3 C P 235; Radhey Shiyam v. Mewa Lal A I R 1929 All. 310; Russel v. Amalgamated Society of Carpenters and Joiners 1912 A C 421; Swaine v. Wilson (1890) 24 Q B D 252 and Thiagaraja Pillai v. Commissioner of Income-tax (1965) 55 I T R 419 ref. JUDGMENT V. G. OAK, C. J.-The question of law referred to this Court by the Income-tax Appellate Tribunal, Allahabad, is as follows:- "Whether, on the facts and in the circumstances of the case, the assessee-firm was entitled to registration under section 26-A of the Act for the assessment year 1958-59 ?" Messrs Oudh Cocogem and Provision Stores, Lucknow, is the assessee. It is a firm carrying on business under an instru ment of partnership dated October 10, 1940. Three brothers are partners of the firm. The assessment year is 1958-59. The firm was being registered for some time. On finding that there was no change in the constitution during the year under assess ment, the Income-tax Officer…