JUDGMENT OF DIVISION BENCH DWARKA PRASAD J.-This is reference by Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, by which following questions of law were referred to this court for its opinion: " 1. Whether, on facts and in circumstances of case, Tribunal was right in holding that firm was not valid and that object of agreement was of such nature that, if permitted, it would defeat public policy as contained in provisions of Rajasthan Excise Act, 1950? 2. If answer to above is in affirmative, whether Tribunal was justified in holding that firm was not valid and, therefore, not entitled to registration under section 185 of Income-tax Act, 1961? " Government of Rajasthan granted licence for retail sale of country liquor during year 1966-67 at Bhilwara including shops situated at Bhupalganj, Gulmandi and Dhanmandi, in joint names of Motilal, Chunnilal and Bhanwarlal, son of Motilal. It appears that with view to carry on aforesaid business of retail sale of country liquor, aforesaid licensees entered into partnership with five other persons and constituted firm, M/s. Motilal Chunnilal, Bhilwara, consisting of following eight partners: 1. Motilal, 2. Chunnilal, 3. Bhanwarlal, 4. Smt. Vijaylaxmi, wife of Satishchandra, 5. Poonamchand, son of Gangaram, 6. Bhuralal, son of Devilal, 7. Ram Nath, son of Magniram, and 8. Smt. Kamala, wife of Mangilal. On basis of deed of partnership dated August 8, 1966, entered into by aforesaid eight persons, assessee, M/s. Motilal Chunnilal, applied for registration of firm. However, registration of firm was refused by Income-tax Officer on ground that partnership was not legal as it violated provisions of clause (3) of terms of licence issued by Excise Department of State. Clause (3) of licence translated into English runs as under: " licence-holder shall not be entitled to transfer licence of shop to any person without written permission of officer granting licence and shall not be entitled to take partner and such permission shall not be given till such time as licence-holder pays all dues outstanding against him. " During course of enquiry, Income-tax Officer found that licence-holders had not obtained permission in writing from authorities of Excise Department of State for entering into partnership with five other persons. Thus, Income-tax Officer held that failure on part of licence-holders to take permission in writing from excise authorities to form partnership amounted to violation of conditions of licence and provisions of Rajasthan Excise Act, and, therefore, contract of partnership was hit by section 23 of Indian Contract Act. Appellate. Assistant Commissioner of Income-tax confirmed on appeal order passed by Income-tax Officer. On further appeal by assessee, Income-tax Appellate Tribunal held that there was clear prohibition in clause (3) of licence in respect of formation of partnership by licenceholders without prior permission of excise authorities. Thus, provisions of excise law have been violated as there was public policy involved in provisions of Excise Act and Rules and agreement of partnership was entered into in violation of such public policy and should, therefore, be held to be invalid. Tribunal thus dismissed appeal and maintained order of refusal of registration of assessee-firm. It was submitted before us by learned counsel for assessee that no public policy was involved in incorporating clause (3) in licence and that violation of provisions of clause (3) would not automatically mean that contract was violative of provisions of section 23 of Indian Contract Act or was void ab initio. It was urged that object of imposition of penalty and provision for cancellation or suspension of licence in case of breach of any terms or conditions of licence have been provided to safeguard excise revenue and not for purpose of protection of public generally or section of public. Learned counsel for assessee relied upon decision of Division Bench of this court in Durga Madira Sangh v. CIT [1985] 153 ITR 226 (Raj) in support of his contention. On other hand, learned counsel for Revenue submitted that entering into partnership with strangers is prohibited as section 54 of Rajasthan Excise Act provides penalty for contravention of provisions of licence granted under Act and section 34(c) provides for cancellation or suspension of licence for breach of conditions thereof, with view of protecting public health and not merely safeguarding excise revenue. question which really arises in present case is as to whether there is prohibition either by provisions of Rajasthan Excise Act or Rules made thereunder or by terms of licence against bolder of licence entering into partnership with third parties. If there is prohibition, partnership entered into in contravention of prohibition would ipso facto become illegal or unlawful. We have to determine whether imposition of condition upon licenceholder of obtaining written permission of competent excise authority before entering into partnership with third parties would amount to prohibition, particularly when breach of such condition exposes licence-holder to imposition of penalty and also to cancellation of licence. In Durga Madirea Sangh's case [1985] 153 ITR 226 (Raj), Bench of this court, after quoting condition No. 3 of licence, held that even aforesaid condition of licence did not " totally " prohibit licensee from entering into partnership but it only requires that licensee should obtain written permission for entering into partnership. Thus partnership was held to permissible but with written permission. It was thus held that business carried on by with written permission. It was thus held that business carried on by partnership firm for and on behalf of partners, including persons in whose names licence was granted, cannot be held to be illegal or void as it was neither forbidden by law nor was in contravention of provisions of section 23 of Contract Act, as there is nothing immoral or against public policy in taking some more person as partners in firm. Lindley in his treatise on he Law of Partnership, Fifteenth edition, summed up law on subject as under: " although statute may in terms apparently prohibit act or omission, and affix penalty in case of disobedience, it does not necessarily follow that all transactions to which penalty attaches are illegal. They are so if statue is really probibitory as is case if penalty is imposed for protection of public, but they are not so if true construction of statute is that penalty is, as it were, price of licence for doing what statute apparently forbids. " law on point has been summed up in Halsbury's Laws of England, III edition, Vol. VIII, paragraph 245, at page 141, as follows: " Where penalty is imposed by statute upon any person who does particular act, this may or may not imply prohibition of that act. It is question of construction in each case whether Legislature intended to prohibit doing of act altogether, or merely to make person who did it liable to pay penalty. If penalty is recurrent, that is to say, if it is imposed not merely once for all but as often as act is done, this amounts to prohibition. Where object of Legislature in imposing penalty is merely protection of revenue, statute will not be considered as prohibiting act in respect of which penalty is imposed; but where penalty is imposed with object of protecting public, though it may also be for protection of revenue, act must be taken to be prohibited, and no action can be maintained by offending party on contract which is made in contravention of statute. " [Emphasis added]. There appears to be sharp divergence of judicial opinion on question as to whether licensee entering into partnership with strangers without obtaining permission of excise authorities renders such partnership illegal and firm is not entitled to registration under Income-tax Act. In Gordhandas Kessowji v. Champsey Dossa [1921] AIR 1921 PC 137, it was held by their Lordships of Privy Council that licensee of salt manufacture cannot be said to contravene terms of licence or provisions of section 11 of Bombay Salt Act, 1890, whereby he is prohibited from " alienating interest ", simply because licensee admitted members of his family and others as partners for sharing profits of business. decision of their Lordships of Supreme Court in Jer & Co. v. CIT [1971] 79 ITR 546, where similar question about partnership in matter of licence for wholesale vending of foreign liquor came up for consideration may also be referred to in this context. In that case, assessee-firm had two partners, one of whom had obtained licence for wholesale vending of foreign liquor which was renewed from year to year. question being raised as to whether firm was entitled to registration under section 26A of Income-tax Act, 1922, it was held by their Lordships of Supreme Court that licence did not prohibit holder from entering into partnership, but it merely provided that licence shall not be sub-let or transferred. It was also held that as there was no prohibition against holder entering into partnership, question whether partnership was illegal did not arise and firm was entitled to registration. It appears that after aforesaid decision of their Lordships of Supreme Court in Jer & Co.'s case [1971] 79 ITR 546, term that licence-holder should obtain permission in writing from excise authorities concerned before entering into partnership has been added in liquor licences. Bench deciding Durga Madira Sangh's case [1985] 153 ITR 226 (Raj) followed line of reasoning adopted by Full Bench of Allahabad High Court in P. C. Kapoor v. CIT [1973] 90 ITR 172. That was also case of licensee of liquor shop entering into partnership with other persons. It was held that merely because other persons were taken into partnership by licensee, it could not be held that any interest in licence was transferred in favour of other partners. Various partners agreed to carry on business of excise contracts on basis of licence standing in name of some of partners. It necessarily implied agreement that business activity would be done in lawful manner and that sale of liquor will be carried on by partners on behalf of all partners in accordance with law. It was held in P. C. Kapoor's case [1973] 90 ITR 172 (All) [FB], that when enactment merely imposes penalty without declaring contract made in contravention thereof to be illegal or void, imposition of penalty by itself and without more does not necessarily imply prohibition of contract; but commission of act leading to contravention of conditions of licence exposes person to imposition of penalty and if excise authority thinks it proper, it may cancel licence. But agreement to enter into partnership could not be held to be forbidden by law and income-tax authorities were not justified in refusing registration to firm. view taken in P. C. Kapoor's case [1973] 90 ITR 172, by Full Bench of Allahabad High Court was also taken by Patna High Court in CIT v. Prakash Ram Gupta [1969] 72 ITR 368 and in Md. Warasat Hussain v. CIT [1971] 82 ITR 718 (Pat) and in CIT v. N. C. Mandal & Co. [1969] 72 ITR 769 (Pat) and in CIT v. Narpati Khan and Co. [1974] 97 ITR 645 (Pat). view was also shared by Calcutta High Court in CIT v. Manick Chandra Dey [1977] 106 ITR 850, wherein view taken by Full Bench of Allahabad High Court in P. C. Kapoor's case [1973] 90 ITR 172 was followed. In CIT v. Gian Chand & Co. [1973] 87 ITR 113 (P & H), decision of their Lordships'of Supreme Court in Jer & Co.'s case [1971] 79 ITR 546 was followed as, under Punjab Fisheries Rules, there is no prohibition in entering into partnership so far as fishing licences are concerned. Madras High Court also took same view in T.K.P.R. Ramanatha Chettiar & Brothers v. CIT [1969] 73 ITR 811 and in National Roadways v. CIT [1975] 99 ITR 97 (Mad), in case of partnership firm running transport business on basis of permits standing in name of one of partners, as there was no prohibition against partnership in Motor Vehicles Act, although there is prohibition against transfer of permit. same view was taken by Division Bench of Madhya Pradesh High Court in Dayabhai & Co. v. CIT [1966] 59 ITR 364 and by Full Bench of Madhya Pradesh High Court in Smt. Janki Bat Chunnilal v. Ratan Melu, AIR 1962 MP 117, in case of partnership relating to transport business. opposite view was taken by Full Bench of Madras High Court in Velu Padayachi v. Sivasooriam Pillai, AIR 1950 Mad 444, which related to partnership entered into for purpose of conducting business for vending arrack or toddy on licence granted to only one of partners. It was held in that case that partnership was ab initio void as entering into partnership involved either transfer of licence which was prohibited under provisions of Abkari Act and was made punishable or because unlicensed partner by himself or through his agent sold excisable goods without licence. same view was also taken in another decision of Madras High Court in D. Mohideen Sahib and Co. v. CIT [1950] 18 ITR 200 and it was held that as partnership contract was itself void ab initio, Income-tax Officer was justified in refusing registration to partnership firm. These decisions of Madras High Court were followed by Kerala High Court in CIT v. Union Tobacco. Co. [1961] 41 ITR 115. decision in Velu Padayachi's case, AIR 1950 Mad 444 [FB], of Madras High Court, was also followed by Andhra Pradesh High Court in CIT v. Krishna Reddy [1962] 46 ITR 784. same view was also taken by Andhra Pradesh High Court in V. Basavayya v. N. Kottayya, AIR 1966 AP 145, that partnership entered into by dealer of cloth iii contravention of provisions of relevant control orders was illegal and void. Andhra Pradesh High Court also took same view in Dinsawji v. Abdul Rasool Khan, AIR 1967 AP 119, and held that agreement to run business of supplying liquor in partnership on licence in name of one of partners was void being opposed to provisions of Abkari Act and rules made thereunder. Madras Full Bench decision in Velu Padayachi's case, AIR 1950 Mad 444, was also followed by Punjab High Court in CIT v. Benarsi Das & Co. [1962] 44 ITR 835 and it was observed that where there is some express prohibition by law or rule having force of law against action of contracting party, contract will be held to be void; where there is no such prohibition, it will be upheld. decision in Benarsi Das & Co.' s case [1962] 44 ITR 835 was followed by Punjab and Haryana High Court in Lalchand Mohan Lal Fazilka v. CIT [1967] 65 ITR 418. Punjab and Haryana High Court again took same view in CIT v. Hardit Singh Pal Chand & Co. [1979] 120 ITR 289 and followed earlier decisions of that court in Benarsi Das' case [1962] 44 ITR 835 and Lalchand Mohan Lal Fazilka's case [1967] 65 ITR 418. In CIT v. Pagoda Hotel and Restaurant [1974] 93 ITR 271, Madhya Pradesh High Court distinguished decisions of Bombay and Patna High Courts holding that mere entering into partnership with outsiders did not interfere with actual working of privilege and did not amount to transfer of privilege on ground that, under Central Provinces Excise Rules, entering into partnership in any way or manner without written permission of Collector is expressly prohibited. decision in Pagoda Hotel's case [1974] 93 ITR 271 (MP) was followed by Madhya Pradesh High Court in CIT v. Sheonarayan Harnarayan [1975] 100 ITR 213 (MP) and decisions of that court in Dayabhai and Co.'s case [1966] 59 ITR 364 (MP) and Janki Bai Chunnilal's case, AIR 1962 MP 117 [FB], were distinguished on ground that prohibition of transfer or lease of privilege stood on footing different from case of prohibition in respect of entering into partnership. It was observed that under M.P. Excise Rules, 1915, there could not be partnership for working of privilege of supply or sale of liquor granted to individual unless written permission was endorsed on licence. partnership formed in contravention of aforesaid provision would be void ab initio. Thus, in case where licence was granted to individual for carrying on business in liquor and he entered into partnership with another person without obtaining written permission of Collector, partnership was held to be void, in so far as it related to liquor business and firm was held not to be entitled to registration in respect thereof. same view was reiterated by Madhya Pradesh High Court in Narsaiya and Co. v. CIT was reiterated by Madhya Pradesh High Court in Narsaiya and Co. v. CIT [1983] 143 ITR 304 and CIT v. Kondra Durgaiya [1983] 143 ITR 315. same view was also taken by Orissa High Court in Mohapatra Bhandar v. CIT [1965] 58 ITR 671 and it was held that income-tax authorities were justified in refusing registration to partnership firm where no leave of Collector was sought to carry on excise business in partnership, while licence for excise shop and for sale of ganja and opium stood in name of one of partners. Madras, Punjab and Kerala decisions were followed and it was held that agreement of partnership was unlawful as possession and sale of ganja was prohibited by Bihar and Orissa Excise Act and rules made thereunder and similar is position of opium, where prohibition was contained in Opium Act and rules made thereunder. In Oudh Cocogem and Provision Stores v. CIT [1968] 69 ITR 819 (All), assessee-firm consisting of three partners carried on business of selling provisions, medicines and wines, but as licence for sale of wines stood in name of one of partners, registration of firm under Income-tax Act was cancelled holding that deed of partnership was void. It was held that partnership carried on business in stores, provisions, medicines and wines and so partnership could not fail in its entirety simply because three brothers also proposed to sell wines in addition to provisions and medicines. In this view of matter, it was held that deed of partnership was not void and mere fact of selling of wine did not make entire partnership itself void or illegal and registration of firm could not be cancelled on ground that partnership was void. facts of this case are clearly distinguishable as it is apparent that partnership was not only for purpose of doing business of selling wines but it was also for doing business in provisions and medicines for which there was no prohibition for entering into partnership. two decisions of Supreme Court are relevant in context of present discussion, though none of them is directly on point in issue before us. In Umacharan Shaw and Bros. v. CIT [1959] 37 ITR 271(SC), three brothers formed joint Hindu family governed by Dayabhaga law and held licences for sale of foreign liquor in their individual names, but not in name of family. After disruption of joint family, three brothers entered into deed of partnership by which they agreed to carry on liquor business in partnership for which they kept separate account books. It was held by their Lordships of Supreme Court that if business was carried on by some members of joint Hindu family, it was open to them to enter into partnership, so long as they did not contravene provisions of Excise Act prohibiting transfer or sub-lease and such partnership could not be said to be illegal or void ab initio. It was held by their Lordships of Supreme Court, while upholding validity of partnership agreement in that case, that there was no evidence that excise licences themselves were transferred or sub-let. Another decision of Supreme Court in case of Jer & Co. v. CIT [1971] 79 ITR 546 has already been noticed by us above. In that case, their Lordships of Supreme Court reversed decision of Allahabad High Court in Jer & Co. v. CIT [1966] 60 ITR 335 (All). In that case, it was held that conditions of licence did not prohibit holder from entering into partnership with outsider, but merely provided that licence shall not be sub-let or transferred and since there was no prohibition against holder of licence entering into partnership, question whether partnership was illegal did not arise and so firm was entitled to registration. In that case, it was observed that rule 322 of Uttar Pradesh Excise Manual prohibited holder of licence from entering into partnership with another person, but rule had no application as licence issued in that case did not contain any such condition. earlier Division Bench of this court in Brij Mohan v. N. V. Vakharia [1965] RLW 254; AIR 1965 Raj 172, held that as business for manufacture of medicines and toilet preparations could not be lawfully carried on without proper licence in accordance with provisions of section 6 of Medicinal and Toilet Preparations (Excise Duties) Act, 1955, read with rule 85(4) of Rules made thereunder, partnership entered into without permission of concerned authority was illegal. In that case also, licence for manufacture of medicines and toilet preparations stood in name of one of partners, but later on licensee entered into partnership with two more persons and partnership took over entire business which was earlier carried on by licensee alone. Division Bench of this court held that collective effect of relevant Division Bench of this court held that collective effect of relevant provisions of Act and Rules led to unmistakable result that business of nature of manufacture of medicinal and toilet preparations cannot be carried on without proper licence in name of partnership. Rule 85(4) referred to by their Lordships provided that if holder of licence wished to enter into partnership in regard to business covered by licence, he could do so after obtaining sanction of licensing authority and licence would thereafter be suitably amended. Thus, in that case, it was also permissible to enter into partnership subject to obtaining sanction of licensing authority. But production or manufacture of dutiable goods by any person without licence was made punishable. resume of various decisions on subject go to show that cases where relevant law under which licence or permit was issued prohibited licensee or permit-holder from entering into partnership for carrying on business under licence without written permission of concerned authority have to be distinguished from cases where licensee was not authorised under relevant law to sub-let, transfer, sell or otherwise alienate privilege granted under licence. This principle was laid-down by their Lordships of Privy Council in Gordhandas Kessowji's case, AIR 1921 PC 137, where section 11 of Bombay Salt Act prohibited licensee from " alienating interest ". same principle, was clearly brought about by their Lordships of Supreme Court in Jer & Co.'s case [1971] 79 ITR 546, where it was observed that licence did not prohibit holder thereof from entering into partnership, but merely provided that licence shall not be sub-let or transferred. decision of Punjab High Court in Gian (hand & Co.'s case [1973] 87 ITR 113 relating to fishing licence and decisions of Madras High Court in Ramanatha Chettiar & Bros.' case [1969] 73 ITR 811 and National Roadways' case [1975] 99 ITR 97 (Mad) relating to transport licences, therefore, stand on different footing from cases relating to liquor licences as they fall within same line as decision of Privy Council in Gordhandas Kessowji's case, AIR 1921 PC 137, and decision of Supreme Court in Jer & Co.'s case [1971] 79 ITR 546. As matter of fact, aforesaid cases were distinguished in subsequent case by Punjab and Haryana High Court and Madras High Court themselves, as mentioned earlier. In same class of case., falls decision of Supreme Court in Uma chandran Shan & Bros.' case [1959] 37 ITR 271, where also prohibition was in respect of transferring or sub-letting business covered by licence. decisions of Patna High Court in Prakash Ram Gupta's case [1969] 72 ITR 366, Md. Warasat Hussain's case [1971] 82 ITR 718 and N. C. Mandal & Co.'s case [1969] 72 ITR 769 also fall in same category of cases, as section 23 of Bihar and Orissa Excise Act only prohibited grantee of exclusive privilege from sub-letting or assigning same or any portion without express permission of concerned authority. In those cases, view taken was that prohibition was against letting or assignment and there was no bar against licence-holder entering into partnership with third parties. However, cases where law specifically prohibits licenceholder from entering into partnership with strangers without express permission in writing of licensing authority and makes breach of condition of licence punishable and also exposes licence to cancellation stand on entirely different footing. taking of partner by licence-holder may not amount to transfer of licence or sub-lease or sale thereof but it would enable unlicensed partner by himself or through his agent to sell excisable articles without holding licence. It may be pointed out that in cases of fishing licences and motor transport permits, prohibition that licence-holder shall not transfer or sub-let or otherwise assign business under licence or permit is meant for protection and convenient collection of revenue. But it is different in cases of abkari, opium and liquor licences, as prohibition has material bearing on working of exclusive privilege granted to licensee and provision in licence that it shall not be assigned, sub-let or transferred and that no partners shall be taken without express permission in writing of licensing authority appears to have been introduced in furtherance of public policy. Bench of this court in Brij Mohan's case [1965] RLW 254, AIR 1965 Raj 172, where prohibition contained in rule 85(4) of Medicinal and Toilet Preparations (Excise Duties) Rules was couched in almost similar language, had taken view that business like one which parties were carrying on could not be lawfully carried on without licence in name of partnership. Unfortunately, that decision was not brought to notice of Bench deciding Durga Madira Sangh's case [1985] 153 ITR 226. In our view, in such cases, question always is whether Legislature intended to prohibit contract which must be decided on construction of statute. If object of enactment or one of its objects in imposing penalty is to protect general public or any class thereof, it would be construed as implying prohibition of contract. On other hand, if object of imposition of penalty is merely protection of revenue, then mere imposition of penalty would not necessarily imply prohibition of contract. Full Bench of Allahabad High Court in P. C. Kapoor's case [1973] 90 ITR 172 took view that only object of annexing condition attached to licence was that excise authorities be always kept acquainted with real persons who were conducting business and question of public policy was not involved. Allahabad High Court's view which was followed in decision of Patna High Court and Calcutta High Court referred to by us above was also relied upon by Bench of this court deciding Durga Madira Sangh's case [1985] 153 ITR 226. But other view taken by, Full Bench of Madras High Court, which was followed by decisions of Andhra Pradesh, Kerala, Punjab and Haryana, Madhya Pradesh and Orissa High Courts cited above, appeals to us, that in case of licences issued for sale of excisable articles, object of imposing condition of prior permission in writing of licensing authority for entering into partnership and of imposition of penalty on failure of obtaining such permission, is not only for protection of revenue but also protection of public in general. intention of Legislature appears to he that business of sale of liquor or other intoxicants may not fall into hands of unsocial elements or undesirable persons. Condition No. 3 of licence provides that licence-holder shall not transfer or assign business or enter into partnership with third parties without obtaining written permission of licensing authority. licensing authority is entitled to verify that persons who are proposed to be inducted as partners by licence-holder are not unscrupulous people. Thus public policy is clearly involved in providing check against introduction of persons having shady background and in safeguarding public from leaders of underworld gaining control over liquor trade in the. State or specified area. That is why section 54 of Rajasthan Excise Act provides penalty for contravention of provisions of licence and section 34(c) exposes licence-holder to cancellation or suspension of licence for breach of condition thereof. Further, section 62 also makes contravention punishable with fine. In our view, it is necessary in order to protect public health that unscrupulous people or persons with shady background may not be inducted by licence-holder in liquor trade by entering into partnership with them. Bench deciding Durga Madira Sangh's case [1985] 153 ITR 226 has observed that Act and rules did not contain direct prohibition but same is contained merely in terms of licence. But decision of their Lordships of Supreme Court in Jer & Co.'s case [1971] 79 ITR 546, makes it clear that if licence contained prohibition and breach of conditions of licence is made punishable by provisions of Act and rules made thereunder, then it cannot be said that there was no prohibition contained in law against entering into partnership without express permission of licensing authority. In Durga Madira Sangh's case [1985] 153 ITR 226, it was also observed that there is nothing immoral or against public policy in taking other persons as partners. However, with great respect to learned judges, as pointed out by us above, entry of unsocial elements in liquor trade by back door by entering into partnership with licence-holder may lead to causing injury to public health and is likely to affect public policy. licensing authority is entitled to consider background or previous conduct of person who has applied for liquor licence under provisions of Rajasthan Excise Act and same vigilance has to be maintained while permitting licence-holder to enter into partnership with other persons or in allowing licensee to transfer or sub-let business carried on under licence. In this view of matter, we are of view that decision by Bench of this court in Durga Madira Sangh's case [1985] 153 ITR 226 requires reconsideration. Moreover, it appears that view taken in that case is also not in conformity with view taken by earlier Bench in Brij Mohan's case [1965] RLW 254; AIR 1965 Raj 172, and decisions of Madras, Kerala, Andhra Pradesh, Madhya Pradesh, Punjab and Haryana and Orissa High Courts, referred to above by us, many of which do not appear to have been brought to notice of Bench which decided Durga Madira Sangh's case [1985] 153 ITR 226 (Raj). As we are inclined to take view different from view taken in Durga Madira Sangh's case [1985] 153 ITR 226, it would be proper that case should be decided by larger Bench. As question involved in present case involves pure question of law, it would be proper that entire case may be referred to larger Bench for decision. We are, therefore, of view that case may be placed before Hon'ble Chief justice for seeking appropriate directions in this respect. JUDGMENT OF FULL BENCH judgment of court was delivered by G. M. LODHA J.-The liquor licensee's alleged efforts to allow back door entry device permitting new partners in firm without permission of excise authorities has assumed another dimension on question of such adulterated firm's recognition by income-tax authorities, under provisions for registration of firms under section 185 of Income-tax Act, 1961. excise authorities normally treat default of payment in other excise licences, conviction, etc., as disqualification for taking licence. Whether bootleggers, defaulters, unscrupulous and unsocial elements who are prohibited from entering by front doors can be allowed backdoor entry without scrutiny of their credentials and credibility by excise authorities, is important facet of this juristic debate to be examined for deciding question whether, under Income-tax Act, registration of such firms should be allowed, where no scrutiny of such disqualifications is permissible. This legal debate has gained added importance on account of two decisions of Division Benches of this court giving green signal and permitting registration and yet third Division Bench has not fallen in line with it and expressed strong voice of dissent emphatically by making reference to Full Bench, for reversal of earlier view of Durga Madira Sangh's case [1985] 153 ITR 226 (Raj). We are, therefore, required to have complete, comprehensive and thorough survey and study of various relevant provisions of Rajasthan Excise Act, 1950, and plethora of decisions from Privy Council to Supreme Court in addition to divergent views of High Courts sittings in Division Benches and Full Benches, about various dimensions and facets of this debate. Hon'ble Mr. justice Dwarka Prasad Gupta and Hon'ble Mr. Justice S. S. Byas, constituting Division Bench of this court, have, therefore, referred this case for decision by larger Bench on account of conflicting views between different Benches of Rajasthan High Court. Apparently, there is sharp divergence of judicial opinion on important question of law regarding registration of partnership firm under Income-tax Act when licensee of Rajasthan having licence under Rajasthan Excise Act enters into partnership with strangers or third party without obtaining permission of concerned excise officer. Division Bench of this court in Brij Mohan v. N. V. Vakharia [1965] RLW 254; AIR 1965 Raj' 172, held that business for manufacture of medicines and toilet preparations could not be lawfully carried on without proper licence under Act of 1955, and, therefore, partnership entered into between partners without permission of concerned authority would be illegal. In Durga Madira Sangh v. CIT [1985] 153 ITR 226, decided by another Division Bench, this court took view that taking in of stranger in partnership of excise licence, without permission of excise authority under Rajasthan Excise Act, would not make partnership illegal and income-tax authorities can recognise it as partnership firm with stranger for income-tax purposes. Yet another Bench of this court consisting of Hon'ble Justice S. K. Mal Lodha and Hon'ble Mr. Justice I. S. Israni in CIT v. Rooplal Danchand [1986] 162 ITR 742 (D.B. Income-tax Reference No. 15 of 1980) decided on February 10, 1986, held that such firm would be valid, as conditions provided for registration under section 185 of Incometax Act are satisfied and it is entitled to registration. It also held that there was no contravention of provisions of Rajasthan Excise Act when Rooplal took over others as partners in business of excise licence. It would thus be seen that there are two Division Bench judgments of this court in Rooplal [1986] 162 ITR 742, decided on February 10, 1986, curiously enough after reference was made on May 6, 1985, in Motilal Chunnilal's case, which is now to be decided, and earlier view in Durga Madira Sangh's case [1985] 153 ITR 226 (Raj). Need for introduction of computers in judiciary: present case would amply show importance of introduction of facility of computer's to co-ordinate different Benches of same High Court and for requirement of legal awareness of latest decisions of other High Courts and Supreme Court which can be readily made available on telex and computers. If telex or word processor facility would have been available then, judgment of Motilal Chunnilal's case, making reference on May 6, 1985, and expressing opinion different from Durga Madira Sangh's case. [1985] 153 ITR 226 (Raj), which was decided earlier could not have remained unnoticed by Division Bench sitting at jodhpur, when they decided on February 10, 1986, case of Rooplal Danchand's case [1986] 162 ITR 742. " In Roma, there is'Supreme Court Electronics Centre's. It has got net work of carrying judicial data on 800 terminals. data contains statutes, judicial precedents, legal literature, decisions of Constitutional, Civil and Criminal courts, legal courts of European countries. computerised data Supply of Italy Electronics Centre can be utilised throughout Europe/America on terminals, which act like Visual Display Unit (V.D.U.) in answering your legal queries. Japan has, in spite of destruction by atomic blast of Hiroshima and Nagasaki in 1945 year rebuilt itself and started electronics and computerisation in Judiciary in 1951 year with data bank. In America and England,'Lexis' is having thousands of terminals where legal opinion is computerised and displayed on V.D.U. Now one can know of latest precedents within 48 hours on V.D.U. throughout world, but we in India still have to spend all our energy in search and research from digests in plethora of precedents. Italian Supreme Court Electronics Centre for Legal Documentation (Court Suprema Dia Cia Ssazione Centro Electronico Legal Documentazione) Italian Supreme Court has Electronic Documentation Centre which provides judges, magistrates, lawyers and general public with all legal data with all necessary information about law and its application. centre is equipped with sperry Univac 1100/81 computing system; data transmission network with approx. 800 elivetli TCV-275 terminals. 1. 211-Terminals: At Supreme Court-all law courts and in number of Magistrate Courts terminals located in court buildings are open to Magistrates, Lawyers, Attorneys at Law, Notaries and Chartered Accountants. 2. 201-Terminals: In other jurisdictions-State Administrative Offices, various public libraries and institutions. 3. 339-Terminals: At other private and public institutes on payment of different tariffs. management of centre arranged training courses in Rome (2 monthly course in Rome, on experimental basis): foreign users are presently connected to centre through European network. Mead Data Central International. world is advancing in more and more technology development and to make use of these developments in our daily life or to make work with greater pace and ease, Mead Data Central International is just example. Now instead of looking through library of thousands upon thousands of newspapers, books and periodicals, law journals, we can get within seconds vast amount of information available electronically. To keep abreast of news that affect decisions, lawyers spend over 80% of their day manning information, which comes from outside sources such as news media, journals, industry and trade press, world of science and technology and law. Mead Data Central International offers wide variety of publications that gives legal and general information and news in full text, which stores entire magazine and newspapers, articles, complete legislation and statutes, patents and books. Moreover, lawyers and judges do not need experience with computers to use system easily and effectively. These informations were created especially for people like judges/lawyers. Thus, computer terminal at our desk or work station can give us wealth of information that can help us to make better decisions, learn more about law: This centre collects information in various fields and some of them are as follows: Legal Information: 1. They contain American, English and French case law (reported and unreported cases). 2. U.S. Federal Statutes, Codes and Regulations, U.K. Statutes and statutory instruments, French laws and regulations. 3. Both reported and unreported cases of European Court of justice. 4. Nearly 3 million cases and other documents which are kept updated continuously and quickly (some of them within 48 hours of decision): 5. World's largest legal research remarks. 6. Special libraries on tax, securities, energy, labour, bankruptcy, trade regulations, international trade, admiralty, communications, patent, copyright and trademark. 7. World's largest legal research services. 8. Identify cases tried before particular judge or by certain lawyer. 9. Find quickly every way in which case has been cited in U.S. or English courts. Quite simply, Mead Data Central offers largest full text data base in world. One can read or scan more than 15 million articles, legal cases, patents and references without even leaving our desk or trace development of legal doctrine by following case from decision to appeal. It is all possible and affordable with power of Mead Data Central Information Services. In U.S.A., legal profession was one of first to recognise time saving benefits of computer-assisted information retrieval. Attorneys in England, United States and France use Lexic Daily, to determine most and recent precedent on specific question of law, keep track of bill's progress in Congress, examine analysis of experts in British and American Legal reviews, or scan journal officials for French Government's latest action on specific point of law. " " computer terminal at our desk or work station can unlock wealth of information we never before knew was available. Information that can help us make better decisions, learn more about our judicial world and keep on top of what's happening in our profession. From world's most prestigious newspapers to detailed technical news-letters, we can find what we need to know through Mead Data Central's Information Service at our fingertips. It places world of knowledge and expertise, ' Lexis' is world's largest legal research service of nearly three million cases and other documents, quickly, continuously updated (some cases are added within 48 hours of decision). It contains American, English, French case added within 48 hours of decision). It contains American, English, French case law (reported and unreported cases) and U.S. Federal Statutes codes and regulations, U.K. Statutes and Statutory instruments, French law and regulations both reported and unreported cases of European Court of justice, special libraries on tax securities, energy, labour, bankruptcy, trade regulations, international trade, admiralty, communications, patent, copyrights and trade marks and decisions of Commission of European Communities relating to competition." If you have got lexis terminal with Indian Taxation Law decisions feeding, you would take few minutes only to know that Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 has disapproved Kalyanji Mavji & Co. v. CIT [1976] 102 ITR 287 and R. K. Malhotra, ITO v. Kasturbhai Lalbhai [1977] 109 ITR 537 on principle of reassessment.. If you want to know latest view of Supreme Court on speculations, V. D. U. would tell you not to refer to Raghunath Prasad Poddar v. CIT [1973] 90 ITR 140 but to refer to Davenport & Co. P. Ltd. v. CIT [1975] 100 ITR 715. electronics Centre would immediately point out that for " Trusts ", tax practitioner must refer to Addl. CIT v. Surat.Art Silk Cloth Manufacturers Association [1980] 121 ITR I (SC), as decision in Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 (SC) is no longer good law. For all latest references, lawyer or judge need not burn midnight oil in digests and references now. latest text of tax laws, rules, notifications, decisions of tribunals, all can be known from them within 48 hours of birth. If Division Bench view of Hon'ble D. P. Gupta J. and Hon'ble S. S. Byas J. had been available before Hon'ble justice S. K. Mal Lodha and Hon'ble I. S. Israni I., then they could not have given judgment affirming view of Durga Madira Sangh's case [1985] 153 ITR 226 (Raj). If computer's facilities had been available, computer and/or word processer, immediately on putting query by judges or advocates about validity or illegality of recognition to firm under Income-tax Act, when it has taken stranger as partner without permission of excise authorities, computers would have displayed that Full Bench is seized of matter in Motilal's case and Durga Madira Sangh's case [1985] 153 ITR 226 (Raj) view is to be reconsidered by Full Bench and, therefore, judges considering case of Rooplal Danchand [1986] 162 ITR 742 (Raj) decided on February 10, 1986, would have immediately obtained judgment under reference and then normally would have passed order for awaiting decision of Full Bench or referred it to Full Bench. absence of telex facilities and computerisation and further ignorance of learned advocate appearing for Revenue on February 10, 1986, in Rooplal Danchand's case [1986] 162 ITR 742 (Raj) about reference to Full Bench in same High Court, resulted in this very anomalous and peculiar situation of there being judgment on February 10, 1986, during pendency of reference of May 6, 1985, confirming judgment of Durga Madira Sangh's case [1985] 153 ITR 226 (Raj) which has been dissented from by Division Bench in Motilal Chunnilal's case. Be that as it may, we have made passing reference to pressing necessity for immediate introduction of electronic technology in legal judicial discipline, so that not only great precious time of all concerned is saved but further such serious errors are avoided and law becomes certain, specific, precise and up to date. We hope this aspect would attract attention of State authorities and top brass of judiciary who in co-ordination would bring Indian judiciary on world judicial map of electronics and technology. Now, before we proceed to discuss in detail various facets of this controversy, let us have resume of facts of instant case and questions referred by Income-tax Appellate Tribunal for decision by High Court: " 1. Whether, on facts and in circumstances of case, Tribunal was right in holding that firm was not valid and that object of agreement was of such nature that, if permitted, it would defeat public policy as contained in provisions of Rajasthan Excise Act, 1950? 2. If answer to above is in affirmative, whether Tribunal was justified in holding that firm was not valid and, therefore, not entitled to registration under section 185 of Income-tax Act, 1961? " Government of Rajasthan granted licence for retail sale of country liquor during year 1966-67 at Bhilwara, including shops situated at Bhopalganj, Gulmandi and Dhanmandi, in joint names of Motilal Chunilal and Bhanwarlal, sons of Motilal. It appears that with view to carry on aforesaid business of retail sale of country liquor, aforesaid licensees entered into partnership with five other persons and constituted firm, M/s. Motilal Chunnilal, Bhilwara, consisting of following eight partners: 1. Motilal, 2. Chunnilal, 3. Bhanwarlal, 4. Smt. Vijaylaxmi, wife of Satishchandra, 5. Poonamchand, son of Gangaram, 6. Bhuralal, son of Devilal, 7. Ram Nath, son of Magniram, and 8. Smt. Kamla, wife of Mangilal. On basis of deed of partnership dated August 8, l966, entered into by aforesaid eight persons, assessee, M/s. Motilal Chunnilal, applied for registration of firm. However, registration of firm was refused by Income-tax Officer on ground that partnership was not legal as it violated provisions of clause (3) of term of licence issued by Excise Department of State. Clause (3) of licence translated into English reads as under: " licence-holder shall not be entitled to transfer licence of shop to any person without written permission of officer granting licence and shall not be entitled to take partner and such permission shall not be given till such time as licence-holder pays all dues outstanding against him. " During course of enquiry, Income-tax Officer found that licence-holder had not obtained permission in writing from authorities of Excise Department of State for entering into partnership with five other persons. Thus, Income-tax Officer held that failure on part of licence-holders to take permission in writing from excise authorities to form partnership amounted to violation of conditions of licence and provisions of Rajasthan Excise Act and, therefore, contract of partnership was hit by section 23 of Indian Contract Act, 1872. Appellate Assistant Commissioner of Income-tax confirmed on appeal order passed by Income-tax Officer. On further appeal by assessees, Income-tax Appellate Tribunal held that there was clear prohibition in clause (3) of licence in respect of formation of partnership by licenceholders without prior permission of excise authorities. Thus, provisions of excise law have been violated as there was public policy involved in provisions of Rajasthan Excise Act and Rules and agreement of partnership was entered into in violation of such public policy and should, therefore, be held to be invalid. Tribunal thus dismissed appeal and maintained order of refusal of registration to assessee-firm. Submission of Mr. Mehta: Before us, as also before Division Bench which had made reference, Shri Rajendra Mehta has argued for assessee as follows: " It was submitted before us by learned counsel for assessee that no public policy was involved in incorporating clause (3) in licence and that violation of provisions of clause (3) would not automatically mean that contract was violative of provisions of section 23 of Indian Contract Act or were void ab initio. It was urged that object of imposition of penalty and provision for cancellation or suspension of licence in case of breach of any terms or conditions of licence have been provided to safeguard excise revenue and not for purpose of protection of public generally or section of public. Learned counsel for assessee relied upon decision of Division Bench of this court in Durga Madira Sangh v. CIT [1985] 153 ITR 226 in support of his contention. On other hand, learned counsel for Revenue submitted that entering into partnership with strangers is prohibited as section 54 of Rajasthan Excise Act provides penalty for contravention of provisions of licence granted under Act and section 34(c) provides for cancellation or suspension of licence for breach of conditions thereof, with view of protecting public health and not merely safeguarding excise revenue. Mr. Mehta then referred to us that according to sections 184 and 185 of Income-tax Act (corresponding to sections 26 and 26A of Indian Income-tax Act, 1922), following conditions are required to be fulfilled in order that firm gets registration under Act: (1) That firm should be constituted under instrument of partnership, specifying individual shares of partners; (2) that application on behalf of, and signed by all partners, containing all particulars as set out in rules has been made. (3) that application has been made before assessment of income of firm made under section 23 of Act, for that particular year; (4) that profits (or loss, if any) of business relating to previous year, that is to say, relevant accounting year, should have been divided or credited, as case may be, in accordance with terms of instrument; and lastly, (5) that partnership must have been genuine and must actually have existed in conformity with terms and conditions of instrument. In R. C. Mitter & Sons v. CIT [1959] 36 ITR 194 (SC), this view has been consistently followed and in this connection reference was made to Agarwal & Co. v. CIT [1970] 77 ITR 10 (SC) and Ratanchand Darbarilal v. CIT [1985] 155 ITR 720 at p. 728 (SC). Mr. Mehta further submitted that once said conditions are fulfilled, then Income-tax Officer is under obligation to register firm and in support of it, he referred us to decision in cases of Agarwal and Co. v. CIT [1970] 77 ITR 10 (SC) and of Ratanchand Darbarilal v. CIT [1985] 155 ITR 720 (SC). On fulfilment of said conditions, Income-tax Officer is bound and under obligation to register firm under Act, as held in Agarwal [1970] 77 ITR 10 (SC); Ratanchand [1985] 155 ITR 720 (SC) and CIT v. Rooplal Danchand [1986] 162 ITR 742, 752 (Raj) decided on February 10, 1986. In present case, all aforesaid conditions are fully satisfied and, therefore, there was no justification for refusal of registration, argued Mr. Mehta. Mr. Mehta then pointed out following features: partnership in present case is legal and valid. Rajasthan Excise Act, 1950, or rules made thereunder do not in any manner prohibit or forbid forming of partnerships and taking of other persons as partners by licence-holders. Rule 72B of Rules only provides that no licence shall be sold or transferred without obtaining previous permission in writing from licensing authority. said rule does not even prohibit/forbid transfer or sale of licence. It authorises sale subject to written permission of authority. In present case, licence has neither been transferred nor sold, only some other persons have been taken as partners. There is no prohibition of taking other persons as partners in said rule or under any other provision of Rajasthan Excise Act or rules. partnership that was formed by licence-holders did not amount to transfer or sale of licence and, therefore, restrictions envisaged by rule 72B are not at all attracted. Now, condition No. 3 of licence may be noticed which, inter alia, contains restriction regarding taking of partners. condition No. 3 reads as under: Firstly, it is submitted that said condition is beyond scope of Excise Act and rules, and, therefore, in so far as it restricts entry of partners, same cannot be enforced. Therefore, said restriction contained in condition is of no consequence. Further, word " law " as used in clause (1) of section 23 of Contract Act means judicial law, i.e., law enacted by any competent Legislature. terms contained in licence cannot be " law ". Entering into partnership without permission may have violated condition No. 3 of licence but that is not violative of any law and, therefore, section 23 of Contract Act is not hit in any manner. Reference was made to two Full Bench judgments reported in A. R. L. P. Firm v. U Po Kyaing, AIR 1939 Rang 305 (headnote G) and Udhoo Dass v. Prem Prakesh, AIR 1964 All I (headnote). Even if we take into account restrictions contained in rule 72B and condition No. 3 of licence, position which emerges is that partnership is not prohibited or forbidden. On other hand, condition itself permits partnership with outsiders subject to written permission. Therefore, it cannot be said that taking of partners is forbidden by law. It will be relevant to mention here that there is no provision in Act, rules or licence that any transfer made in violation of rule 72 or any partner taken in violation of condition No. 3 would make such partnership illegal. Further, there is no provision in Excise Act and rules that if partnership is formed for liquor business, then business can be carried on only with licence obtained by such firm itself. Mr. Mehta then invited our attention to following decisions: (a) Gordhandas Kessowji v. Champsey Dossa, AIR 1921 PC 137: Privy Council decision which was judgment in appeal from Bombay High Court judgment reported in AIR 1917 Bom 250 (Champsey v. Gordhandas) clearly laid down that formation of partnership does not amount to transfer. In that case, licensee for salt manufacture took other persons as partners and relevant clause only prohibited sale or alienation of interest. (b) Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC): In this case, liquor licences for three shops were in different names but not in name of family. Partnerships were formed with persons other than not in name of family. Partnerships were formed with persons other than licence-holders along with licence-holders themselves. Section 42(1) of Bengal Excise Act restricted transfer of licence without permission. Before Hon'ble Supreme Court, it was urged that partnership was not genuine. Supreme Court at page 276 observed that " there was no evidence that excise licences were transferred or sub-let ". This decision is authority for proposition that partnership business can be carried on strength of licence held by partner and that prohibition regarding transfer of licence does not mean prohibition from taking partner. Formation of partnership is not transfer of licence and such partnership is legal. (c) Jer & Co. v. CIT [1971] 79 ITR 546 (SC): In Jer & Co.'s case, Hon'ble Supreme Court held that there was no positive prohibition against formation of partnership in clause 13 of licence as it merely provided that licence shall not be sub-let or transferred. Supreme Court, therefore, held that question regarding illegality of partnership did not arise and firm was entitled to registration. In this case, Supreme Court reversed Allahabad High Court judgment reported in Jer & Co. v. CIT [1966] 60 ITR 335. Allahabad High Court judgment was based on Velu Padayachi's case, AIR 1950 Mad 444 [FB], Govindaraj's case AIR 1957 Mad 186, Mohideen Sahib & Co.'s case [1950] 18 ITR 200 (Mad), Union Tobacco Co.'s case [1961] 41 ITR 115 (Ker), Benarsidas & Co.'s case [1962] 44 ITR 835 (Punj) and Krishna Reddy & Co.'s case [1962] 46 ITR 784 (AP). In view of fact that Allahabad High Court judgment was reversed by Hon'ble Supreme Court, authorities on which Allahabad High Court judgment was based must be deemed to have been impliedly overruled by Supreme Court judgments reported in Umacharan Shaw & Bro.'s case [1959] 37 ITR 271 and Jer & Co.'s case [1971] 79 ITR 546. Madhya Pradesh High Court in Dayabhai & Co.'s case [1966] 59 ITR 364, Patna High Court in Narpathi Khan & Co.'s case [1974] 97 ITR 645, Punjab High Court in Gian Chand & Co.'s case [1973] 87 ITR 113 and Andhra Pradesh High Court in Nalli Venkataramana's case [1984] 145 ITR 759 have all taken view that Madras High Court's Full Bench in Velu Padayachi v. Sivasooriam Pillai, AIR 1950 Mad 444, or cases following said Madras High Court judgments must be deemed to be impliedly overruled. (d) K. M. Vishwanatha Pillai v. K. M. Shanmugham Pillai, AIR 1969 SC 493: In this case arising under Motor Vehicles Act, Hon'ble Supreme Court while holding that stage carriage could be plied lawfully by real owner even though permit was in name of benamidar, expressly dissented from judgment of Madras High Court in A.V. Varadarajulu Naidu v. K. V. Thavasi Naidu, AIR 1963 Mad 413 (refer para 10 of Supreme Court judgment). A. V. Varadarajulu Naidu's case, AIR 1963 Mad 413, is based on AIR 1950 Mad 444 [FB] (refer para 9 at page 417 of AIR 1963 Mad 413). Thus, it is clear that dissent of AIR 1963 Mad 413 also extended to AIR 1950 Mad 444 [FB] and all other cases based on said judgment. (e) Udhoo Dass v. Prem Prakash, AIR 1964 All 1 [FB]: In this case, it was held that contract of tenancy entered into " without permission " of concerned authority was not void even though statute penalised for not obtaining permission in contravention of provisions of Act. (f) Murlidhar Agarwal v. State of Uttar Pradesh, AIR 1974 SC 1924: decision in Udhoo Dass' case, AIR 1964 All 1 [FB] has been followed in P. C. Kapoor v. CIT [1973] 90 ITR 172 (All) [FB] and CIT v. Nalli Venkataramana [1984] 145 ITR 759 (AP) and has been approved by Hon'ble Supreme Court in Murlidhar Agarwal's case, AIR 1974 SC 1924, 1927. Supreme Court held lease to be valid even without permission even though breach was punishable. agreement of partnership between partners, i.e., licenceholders and outsiders, is valid and binding. This might not have bound excise authorities and they could have taken action regarding cancellation or suspension of licence or imposition of penalty, according to law. This has not been done in present case. Thus, it is clear that mere non-obtaining of permission would not render partnership invalid. (g) Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781: Held, that partnership agreement which was collateral agreement in respect of wagering contracts was valid between partners. It was not hit by section 23 of Contract Act. In this case, scope of public policy under section 23 of Contract Act was also examined and it was held that principles of public policy have already been laid down under different heads and that they cannot be expanded and new heads should not be made out. Thus, it is quite clear that Velu Padayachi's case, AIR 1950 Mad 444 [FB], Mohideen Sahib & Co.'s case [1950] 18 ITR 200 (Mad), Union Tobacco Co.'s case [1961] 41 ITR 115 (Ker), Krishna Reddy & Co.'s case [1962] 46 ITR 784 (AP) and Benarsi Das & Co.'s case [1962] 44 ITR 835 (P&H) like other cases do not lay down good law and they stand impliedly overruled by aforesaid Supreme Court judgments. judgment under reference is mainly based on aforesaid decisions which already stand impliedly overruled. (h) Mohamad Syed Baba v. Universal Timbers Traders, AIR 1976 J & K 9: Assignment of leasehold rights to third person without Government sanction held not void. It is not against section 23 of Contract Act or against public policy. In para 13, it has been observed that there was no absolute prohibition on assignment which was only subject to permission. (i) P. C. Kapoor v. CIT [1973] 90 ITR 172 (All) [FB]: Formation of partnership does not amount to transfer of licence. Held, that condition contained in licence and excise law regarding previous sanction for entering into partnership is not statutory (at page 184) and, therefore, it is not law which prohibits partnership. In any case, absence of such permission would not render partnership invalid. Penalty for breach of such condition without declaring contract made in contravention of such condition to be illegal does not imply prohibition. Held, firm entitled to registration. In our case also, penalty is envisaged under section 62 of Excise Act which makes wilful contravention punishable with fine, extending to Rs. 200. object of controlling sale of liquor seems to ensure realisation of excise revenue. Section 62 also does not cover penalty in case of breach of condition of licence. Section 34 of Excise Act only gives power to cancel or suspend licence in case of breach of condition. No action has been taken in this respect. This power is discretionary. Until licence is cancelled, licensee can carry on business. formation of partnership itself is not prohibited. (j) Durga Madira Sangh v. CIT [1985] 153 ITR 226 (Raj): Held, that there was no direct prohibition under Rajasthan Excise Act and rules that licensee could not enter into partnership. Even condition in licence did not totally prohibit formation of partnership. Partnership was permitted with written permission. There is nothing immoral or against public policy in taking other persons as partners. firm was held to be entitled to registration. (k) CIT v. Rooplal Dhanchand [1986] 162 ITR 742 (D.B.I.T. Ref. No. 15 of 1980) decided on February 10, 1985, by Hon'ble S. K. Mal Lodha J. and Israni J. Held, that partnership did not contravene any provision of Excise Act or rules. Hence entitled to registration. In this case, P. C. Kapoor's case [1973] 90 ITR 172 (All) [FB] and N. C. Mandal & Co.'s case [1969] 72 ITR 769 (Pat) were followed and cases relied on by Revenue including Hardit Singh Pal Chand & Co.'s case [1979] 120 ITR 289 (Punj) and Narsaiya & Co.'s case [1983] 143 ITR 304 (MP) were distinguished. (1) CIT v. Nalli Venkataramana [1984] 145 ITR 759 (A P): In this case, all authorities on point in issue have been taken into consideration and it has been held that even though permission of licensing authority was not obtained before taking new partner, partnership was not illegal. (Rule 9(2) of Andhra Pradesh Excise Rules, 1969). As between partners it continues to be valid and is entitled to registration under Income-tax Act. This authority fully applies to present case and it clearly holds that case law on basis of which reference has been made are no longer good law. In this case, Supreme Court judgment given (unreported) in Govind Rao v. Nathmal on April 11, 1962, has also been distinguished. It has also been held that partnership is valid even though permission of excise authority was not obtained for taking partners and even though authorities may have power to punish parties for contravention of Act and rules. In this case, it has also been held that authorities in Sheonarayan Harnarayan's case [1975] 100 ITR 213 (MP), Pagoda Hotel's case [1974] 93 ITR 271 (MP) and Mohapatra Bhandar's [1965] 58 ITR 671 (Orissa) (which have also been relied upon in judgment under reference) were contrary to principle laid down by Hon'ble Supreme Court. (m) Malwa Knitting Works v. CIT [1977] 107 ITR 379 (M P): advocate became partner in firm in violation of Bar Council Act. Held, even by participation of advocate, partnership is not rendered illegal. (n) CIT v. Manick Chandra Dey [1977] 106 ITR 860 (Cal): provision did not prohibit partnership. licensing authority did not take any action against licensee. Income-tax Officer could not decide about validity of firm. Following [1971] 79 ITR 546 (SC), [1973] 87 ITR 113 (Punj) and [1973] 90 ITR 172 (All) [FB], held that firm is entitled to registration. (o) Sree Ramakrishna Mining Company v. CIT [1967] 64 ITR 197 (MYS): Mineral Concession Rules, 1949: Rule 37 providing for transfer of lease with previous sanction of State Government. No provision that transfer in contravention thereof would be void. Hence, firm is legal and valid. rule does not forbid transfer. It authorises transfer with previous sanction. There is distinction between statutory provision which contains express prohibition against performance of certain act and one which enables its performance subject to prescribed conditions. Absolute prohibition against performance is forbidden by law but this is not so in cases falling under second category. partnership in this case is not prohibited by law, nor was it such that, if permitted, would defeat provisions of any law and performance of contract was possible without disobeying law and hence partnership was not illegal under section 23 of Contract Act. (p) CIT v. Prakash Ram Gupta [1969] 72 ITR 366 (Pat): Excise case: Held, that formation of partnership is not transfer of licence. At page 373, it was observed that Madras High Court judgment was not correct. Firm entitled to registration. Mr. Mehta then referred to decision of Brij Mohan's case [1965] RLW 254, which has been relied upon by Division Bench making reference to other decisions while giving reply to submission made by Mr. Arora. (q) CIT v. Gian Chand and Co. [1973] 87 ITR 113 (Punj): case of fishing licence-No prohibition of partnership-Held, at page 115, that [1962] 44 ITR 835 (Punj), [1965] 58 ITR 671 (Orissa) and [1966] 60 ITR 335 (All), no longer good law-Registration granted. (r) Md. Warasat Hussain v. CIT [1971] 82 ITR 718 (Pat): Excise case: Formation of partnership does not amount to transfer of licence-Provisions of Excise Act not contravened-Firm held entitled to registration. (s) CIT v. Narpati Khan & Co. [1974] 97 ITR 645 (Pat): Excise case: Followed [1969] 72 ITR 366 (Pat), [1971] 82 ITR 718 (Pat) and held that [1961] 41 ITR 115 (Ker), [1966] 60 ITR 435 (All) and [1950] 18 ITR 200 (Mad) are no longer good law. Mr. Mehta then distinguished decision in [1965] RLW 254 (Brij Mohan v. N. V. Vakharia), and submitted that this judgment has been relied upon by Division Bench in making reference. This judgment is based on unreported decision of Supreme Court in Govind Rao v. Nathmal decided on April 11, 1962. In that case, Supreme Court held that licence in name of one partner cannot be accepted as licence in name of partnership. There, Supreme Court laid emphasis on section 3(1) of C.P. & Berar Food Grains (Control) Order, 1945, which prohibited any person from dealing in foodgrains without, licence. words " deal in foodgrains " were defined as follows: " To engage in business of purchase, sale, or storage for sale of foodgrains whether on one's own account or on account of any partnership. " Supreme Court held that word " person " includes group or association of persons like firm of partners. In this context, Supreme Court observed that as partnership was not licensed, it could not deal in foodgrains. Thus, in case before Supreme Court, there was specific prohibition against formation of partnership by licensee-partner. Even with permission of competent authority, licence in individual's name could not be used by partnership. It was necessary for partnership itself to have licence. aforesaid position has been clearly brought out in Vasant Rao's case [1970] 72 Bom LR 333. This decision has been followed in CIT v. Nalli Venkataramana [1984] 145 ITR 759 by Andhra Pradesh High Court. petitioner places reliance on them. Therefore, said Supreme Court judgment and [1965] RLW 254 which are based on said Supreme Court judgment are clearly distinguishable. Further, [1965] RLW 254 is not in conformity with Supreme Court judgments in [1959] 37 ITR 271, [1971] 79 ITR 546, AIR 1969 SC 493, AIR 1974 SC 1924 and AIR 1959 SC 781 and, therefore, same cannot be considered to be good law. Further, in [1965] RLW 254, word " person " has been used in section 6 of Act of 1955 and defined specifically whereas there is no such provision under Rajasthan Excise law. Rule 85(4) also contained prohibition regarding partnership but under Rajasthan Excise Act or rules, there is no such prohibition, argued Mr. Mehta. It is well-settled that decision of Supreme Court cannot be ignored on ground that there Lordships have not considered question of public policy. He referred to Ballabhdas' case, AIR 1970 SC 1002 para 4. It is also settled that decision of Supreme Court may not in so many words state that certain cases were wrongly decided, still when Supreme Court decided in particular way, every previous decision which had answered same question in different way cannot but be held to have been wrongly decided. Mr. Mehta referred to Jai Kaur v. Sher Singh, AIR 1960 SC 1118. In CIT v. Abdul Rahim & Co. [1965] 55 ITR 651 (SC), it was held that even if it is found that one of partners of firm was benami for another person, still firm is entitled to registration. beneficial interest in income pertaining to share of said benamidar may have relevance to matter of assessment but not in regard to question of registration (paragraph No. 13 of report). Thus, conclusion is that partnership firm by licenseepartner without permission of competent authority cannot be considered to be illegal or void and in this connection, as already stated above, following judgments of Privy Council and Supreme Court are directly on point apart from other cases stated above. AIR 1921 PC 137 (Gordhandas' case), [1959] 37 ITR 271 (SC) (Umacharan's case), [1971] 79 ITR 546 (SC) (Jer & Co.'s case), AIR 1969 SC 493 (Vishwanatha's case), AIR 1974 SC 1924 (Murlidhar's case), AIR 1959 SC 781 (Gherulal's case) and [1965] 55 ITR 651 (SC) (Abdul Rahim (A.) & Co.'s case). Further, agreement of partnership has to be construed in manner which would be consistent with provisions of Excise Act and rules. clause in partnership deed entitling all partners to manage and conduct firm's business does not necessarily mean that non-licensee partner claimed right to sell liquor. Such partner would participate in manner permissible by law. In this connection, following decisions are directly on point[1973] 90 ITR 172 All (FB] (P. C. Kapoor's case), [1969] 72 ITR 366 (Pat) (Prakash Ram Gupta's case), [1960] 38 ITR 560 (Pat) (K. C. S. Reddy's case), [1971] 82 ITR 718 (Pat) (Mohd. Warasat Hussain's case), [1967] 64 ITR 197 (Mys) (Sree Ramakrishna Mining Co.'s case) and [1967] 1 All ER 241 (Ch D) (Dungate's case) relevant portion at page 250. In present case, there is no material on record produced by Department to show that non-licensee partner had acted in contravention of Act or rules. Further, even if it is so, formation of partnership at its inception being not in violation of Act or rules, subsequent acts of partners cannot make firm illegal. There is always difference between illegality of contract and illegality in its performance. Therefore, subsequent acts of partners cannot make partnership illegal. That on question of public policy under section 23 of Contract Act, it would suffice to say that Hon'ble Supreme Court in Umacharan Shaw and Bros. v. CIT [1959] 37 ITR 271 and Jer and Co. v. CIT [1971] 79 ITR 546, which were cases under Excise Act, held that partnerships were entitled to registration and thus there is no question of any public policy involved in excise partnerships. fact that Supreme Court did not consider question of public policy is hardly of any consequence as already held in Ballabhdas Mathuradas Lakhani v. Municipal Committee, AIR 1970 SC 1002. agreement of partnership is not placed on record for coming to such conclusion. Further, no public policy is involved in this case as propounded by established decisions. agreement in question is not covered under any of heads of public policy and, therefore, question of its contravention does not arise. New heads of public policy cannot be made out as already held in R. C. Mitter & Sons' case [1959] 36 ITR 194 (SC). licences are granted in order to have control over persons who are authorised to sell liquor. object of controlling persons seems to ensure realisation of excise revenue. This is also explicit in condition No. 3 of licence. Section 62 of Rajasthan Excise Act, if at all same is attracted on account of contravention of any condition in licence, only provides for imposition of penalty on wilful contravention (This only shows that entering into partnership as such is not prohibited). Further, penalty is also only leviable (if at all that be so) once and for all and it is not recurring. only case of Department is that partnership is in violation of condition of licence and, therefore, illegal and hit by section 23 of Contract Act. This does not mean that agreement of partnership is against public policy. In Division Bench judgment of this Hon'ble Court in [1985] 153 ITR 226 (Raj) (Durga Madira Sangh v. CIT) and in other cases directly on point, namely, (P. C. Kapoor's case) [1973] 90 ITR 172 All [FB], CIT v. Prakash Ram Gupta [1969] 72 ITR 366 (Pat), Sree Ramakrishna Mining Company v. CIT [1967] 64 ITR 197 (Mys), CIT v. Nalli Venkataramana [1984] 145 ITR 759 (AP) and CIT v. Manick Chandra Dey [1977] 106 ITR 860 (Cal), question of public policy has been considered and it has been held that no such public policy was involved in agreements of partnerships relating to excise licences. Abkari, opium or liquor licences are also for protection and convenient collection of revenue. fact that permission can be granted and that only wilful breach is penalised and that too only once clearly shows that constitution of partnership is permissible. condition regarding permission in writing has nothing to do with public policy. No protection of public in general is involved. learned Division Bench making reference has merely relied upon conjectures, surmises and hypothetical situations, namely, that sale of liquor should not fall in hands of unsocial, undesirable and unscrupulous people. There is no question of protecting public from leaders of underworld. laws of our country including Excise Act are there to take care of such persons and situations. Such conjectures and surmises based on mere whims cannot render otherwise genuine and valid partnership not genuine or invalid. It is nobody's case that unscrupulous people were taken as partners. partners have been taken for finances and efficient running of business. There is nothing immoral or against public policy in taking other persons as partners. question of registration under Income-tax Act has nothing to do with hypothetical situations, argued Mr. Mehta. He contended that if in such circumstances partnership is held to be void, then partners or any of them or even outsiders will not be able to maintain any action, say, for example, regarding recovery of money, rendition of accounts, etc., against firm and firm would be able to avoid its otherwise legal liabilities and obligations under cover of its so-called illegal formation on account of alleged violation of some provisions of Excise Act and rules. There are numerous restrictions under excise law and their violation cannot render firm invalid, e.g., establishment of shop in particular areas. Such view would be against general public interest, spirit of law and such interpretation cannot, therefore, be given. Cancellation of licence: licence is granted for one year under Excise Act and rules. fact that licence was not cancelled during its currency or at any time shows that partnership rightly and validly carried on business. No penalty was also imposed. cancellation of licence on account of non-obtaining of permission for taking partner (if permissible in law) would naturally lead to closure of business as basis of business, namely, licence would not be there. In such case, question of registration under Income-tax Act would not arise. Submission of Mr. Arora: We have mentioned above submission of Mr. Mehta and not our comments as we would give our comments and decision on them after mentioning reply of Mr. Arora, counsel for Revenue. Mr. Arora, appearing for Revenue, has argued that first partnership for which licence for sale of country liquor in shops of Gopal Ganj, Gul Mandi and Dhan Mandi of town of Bhilwara for year 1956-57 was granted consisted of Moti Lal, son of Chunni Lal, and Bhanwar Lal, son of Moti Lal. However, after grant of licence, more partners were included. Income-tax Officer found that apart from Moti Lal and Chunni Lal, sons of Motilal and Bhanwar Lal, they further included Smt. Vijaylaxmi Poonam Chand, Bhoorlal, Ramnath and Kamla. licensee never applied for permission to Excise Officer for this inclusion and change of partnership and thus altered partnership firm functioned without permission of excise authority. He found that this inclusion was not permissible, for, provisions of Rajasthan Excise Act were violated. Therefore, section 23 of Indian Contract Act was attracted and assessee was not entitled to registration under section 185 of Income-tax Act. Mr. Arora pointed out that this view of Income-tax Officer refusing to grant registration was upheld by Appellate Assistant Commissioner of Income-tax, Udaipur, and then afterwards it was further upheld by Appellate Tribunal. appellate authorities were of opinion that various provisions of Excise Act as well as rules and conditions framed thereunder regulating consumption and sale of excisable articles were violated and restrictions and regulations were for benefit of public and, therefore, registration, if granted, would be against public policy. Tribunal also rejected appeal and upheld judgment of Income-tax Officer. reference was made by Tribunal under section 256(1) for opinion of High Court whether rejection was valid and whether object of agreement of inclusion of partnership was to defeat public policy as contained under provisions of Rajasthan Excise Act. view which has found favour with Division Bench consisting of Hon'ble justice Gupta and justice Byas being different from earlier view of Durga Madira Sangh's case [1985] 153 ITR 226 (Raj)is based on ground that provisions of Rajasthan Excise Act fails to recognise such partnership unless permission is given and taken. , This view was consistent with view taken earlier by Bench in Brij Mohan's case [1965] RLW 254 and decisions of Madras, Kerala, Andhra Pradesh, Punjab and Haryana and Orissa High Courts. Mr. Arora submitted that Supreme Court in decision of Jer and Company [1971] 79 ITR 546, where condition was added in liquor licence which was applicable to petitioner-assessee, held that such licence-holder before entering into partnership should obtain previous permission in writing from excise authorities, and since no such permission was taken in present case, Mr. Arora submitted that this decision would also apply in support of view of Division Bench referring case to Full Bench. Mr. Arora also pointed out that acceptance or refusal to include other persons as partners in partnership for sale of country liquor depends upon various factors for Excise Department's consideration and, therefore, unless inclusion is allowed by express permission, recognition of such partnership by income-tax authorities would indirectly encourage unscrupulous persons entering into partnership against excise laws and carrying on business in violation of excise laws and against public interest and public policy. In this connection, Mr. Arora referred to sections 54, 34(c), 62 of Excise Act and rule 72B of Excise Rules imposing certain conditions. intention of entire scheme of Rajasthan Excise Act and Rules and conditions is that entry of unscrupulous persons and anti-social elements and defaulters in partnership firm should be avoided. In support of his contention that change of partners without permission of excise authority by liquor licensee in Rajasthan is against public policy, Mr. Arora referred to following decisions: Velu Padayachi v. Sivasooriam Pillai [1950] AIR 1950 Mad 444 [FB]; D. Mohideen Sahib & Co. v. CIT [1950] 18 ITR 200 (Mad); CIT v. Union Tobacco Co. [1961] 41 ITR 115 (Ker); CIT v. Krishna Reddy & Co. [1962] 46 ITR 784 (AP); V. Basavayya v. N. Kottayya, AIR 1964 AP 145; Dinsawji v. Abdul Rasool Khan, AIR 1967 AP 119; CIT v. Benarsi Das & Co. [1962] 44 ITR 835 (P & H); CIT v. Hardit Singh Pal Chand and Co. [1979] 120 ITR 289 (P & H); CIT v. Pagoda Hotel and Restaurant [1974] 93 ITR 271 (MP); CIT v. Sheonarayan Harnarayan [1975] 100 ITR 213 (MP); CIT v. Kondra Durgaiya [1983] 143 ITR 315 (MP); Narsaiya & Co. v. CIT [1983] 143 ITR 304 (MP); Mohapatra Bhandar v. CIT [1965] 58 ITR 671 (Orissa); Oudh Cocogem and Provision Stores v. CIT [1968] 69 ITR 819 (All) and Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC). It was pointed out that above decisions would show that decision of Income-tax Officer upheld by Appellate Assistant Commissioner and Tribunal was in accordance with law and refusal to register partnership firm by Income-tax Officer was justified. We have Summarised so far rival contentions only, so that now decks are clear for our adjudication and decision. Nothing mentioned above so far can be treated as our decision on questions referred to us. Now onwards we would give our views and decision. Rajasthan Excise Law's extracts: In order to decide issues involved, we would first of all have resume and study of various provisions under Rajasthan Excise Act and Rules, about relevant points involved in respect of licence for liquor sale and various regulations, restrictions, prohibitions, conditions, etc. Rajasthan Excise Act, 1950, governs possession and sale of liquor in Rajasthan. In order to carry out provisions of Excise Act, 1950, rules have been framed in 1956 which are known as Rajasthan Excise Rules (hereinafter called as " Rules"). Under Act, " manufacture " and " sale " have been defined under clauses (17) and (20) of section 3 which read as under: "'Manufacture' includes every process, whether natural or artificial, by which any excisable article is produced or prepared wholly or partly and also re- distillation and every process for rectification, reduction, flavouring, blending or colouring of liquor; or colouring of liquor; ' Sale' with its grammatical variations includes any transfer otherwise than by way of gift. " Section 13 empowers Government to prohibit import, export and transport of excisable articles. Section 16 prohibits manufacture of excisable articles, prohibited except under provisions of this Act. Section 20 expressly prohibits sale of excisable articles without licence. Section 20 reads as under: " No excisable article shall be sold without licence from Excise Commissioner (or any Excise Officer duly empowered in that behalf) provided that: (1) person licensed under this Act to cultivate or collect hemp plant (cannabis satiya) may sell without licence those portions of plant from which any intoxicating drugs can be manufactured to any person licensed under this Act to deal in same or to any officer whom Excise Commissioner may prescribe; (2) licence for sale in more than one district of those parts of State of Rajasthan to which this Act extends shall be granted with previous approval of State Government and; (3) nothing in this section applies to sale of any foreign liquor legally produced by any person for his private use and sold by him or by auction on his behalf or on behalf of his representatives-in-interest upon his quitting station or after his decease. " Licences are granted under Chapter VI. Section 37 prescribes form of conditions of licences. Section 34 provides power to cancel suspected licence and so also section 35. Sections 31, 34 and 35 read as under: " Section 31. Every licence, permit or pass granted under this Act, shall be granted: (a) by such authority; (b) on payment of such fees (if any); (c) subject to such restrictions and on such conditions; (d) in such form and containing such particulars; and (e) for such periods; as State Government may prescribe by rules either generally or for any class of licences, permits or passes or as (State Government) may direct for any particular licence, permit or pass." " Section 34. Power to cancel and suspend licences.-(1) Subject to such restrictions as State Government may prescribe, authority granting any licence, permit or pass under this Act may cancel or suspend it-- (a) if it is transferred or sub-let by holder thereof without permission of said authority; or (b) if any duty or fee payable by holder thereof be not duly paid; or (c) in event of any breach by holder of such licence, permit or pass or by his servants, or by anyone acting on his behalf with his express or implied permission, of any of terms or conditions of such licence, permit or pass; or (d) if holder thereof is convicted of any offence punishable under this Act or any other law for time being in force relating to revenue or of any cognizable and non-bailable offence or any offence punishable under Dangerous Drugs Act, 1930 (Central Act II of 1930), or any law relating to merchandise marks or of any offence punishable under sections 482 to 489 (both inclusive of Indian Penal Code); or (e) where licence, permit or pass has been granted on application of grantee of exclusive privilege under this Act, on requisition in writing of such grantee; or (f) if conditions of licence, permit or pass provide for such cancellation or suspension at will. (2) When licence, permit or pass held by any person is cancelled under sub-section (1), authority aforesaid may cancel any other licence, permit or pass granted to such person under this Act or any other law for time being in force relating to excise, revenue or under Opium Act, 1878 (Central Act I of 1878). (3) holder of licence, permit or pass shall not be entitled to any compensation for cancellation or suspension thereof under this section or to refund of any fee paid or deposit made in respect thereof. " Offences are given in Chapter IX and section 54 provides penalty for import, export, transport, manufacture, possession, and section 58 provides penalty for certain offences. Sections 54 and 58 read as under: " Section 54. Penalty for unlawful import, export, transport, manufacture, Possession, etc.Whoever, in contravention of this Act or any rule, or order made or of any licence, permit or pass granted, thereunder: (a) imports, exports, transports, manufactures, collects, sells or possesses any excisable articles; or (b) cultivates any hemp plant (cannabis Satiya); or (c) constructs or works any distillery, pot still or brewery; (d) uses, keeps or has in his possession any materials, still, utensil, implements or apparatus whatsoever for purpose of manufacturing any excisable article other than tari; or (e) removes any excisable article from any distillery, pot still (brewery) or warehouse established or licensed under this Act; or (f) bottles any liquor for purposes of sale; or (g) taps or draws tari from any tari producing trees; shall be punishable with imprisonment for term which may extend to two thousand rupees: Provided that if person is so found in possession of workable still for manufacture of any excisable article or is found to be guilty of selling or possessing for sale any excisable article in contravention of provisions of this Act or of any rule or order made or of any licence, permit or pass granted thereunder, he shall be punishable with minimum sentence of imprisonment for six months and fine of two hundred rupees. " " Section 58. Penalty for certain acts by licensee or his servants.-Whoever being holder of licence, permit or pass granted under this Act, or being in employ of such holder and acting on his behalf: (a) fails to produce such licence, permit or pass on demand of any excise officer or of any officer duly empowered to make such demand; or (b) in any case not provided for in section 54 wilfully contravenes any rule made under section 41 or 42; or (c) wilfully does or omits to do anything in breach of any of conditions of licence, permit or pass not otherwise provided for in this Act; shall be punished for each such offence with fine which may extend to five hundred rupees." Section 62 provides for penalties for offences not otherwise provided for which reads as under: " Penalties for offences not otherwise provided for.-Whoever is guilty of any act or intentional omission in contravention of any of provisions of this Act, or of any rule or order made under this Act and not otherwise provided for therein shall be punishable for each such act or omission with fine which may extend to two hundred rupees." " Section 64(1). When any excisable article has been manufactured or sold or is possessed by any person on account of any other person and such other person knows or has reason to believe that such manufacture or sale was or that such possession is, on his account, article shall, for purpose of this Act, be deemed to have been manufactured, or sold or to be in possession of such other person. (2) Nothing in sub-section (1) shall absolve any person who manufactures, sells or has possession of excisable article on account of another person from liability to punishment under this Act for unlawful manufacture, sale or possession of such article. " We then come to Excise Rules and rule 72 provides for application for licence which reads as under: " Rule 72. Who may grant licences.-Except as otherwise provided in these rules, all licences under Act shall be granted by Excise Commissioner. " It is significant that rule 72B was introduced on November 19, 1959, expressly prohibiting sale or transfer of licence without prior permission in writing from licensing authority. Rule 72B reads as under: " Rule 72B. Transfer of licence.-(a) Every licence shall be deemed to have been granted or renewed personally to licensee and no licence shall be sold or transferred without obtaining previous permission in writing from licensing authority. " Rule 74 provides for disqualification for holding licences which reads as under: " Rule 74. Persons debarred from holding.-Without previous written sanction of Excise Commissioner: (1) No person holding or having interest in licence for manufacture, sale or supply of foreign liquor in district may hold or possess any interest in licence for retail sale of country liquor in district. (2) No person holding or having interest in licence for retail sale of opium, denatured spirit or intoxicating drugs in district may hold or possess any interest in licence for wholesale or retail manufacture or sale of foreign or country liquor in same district. (3) No person shall hold or have interest in two or more shops for retail sale of same excisable articles in same village, or in same city or town, and (4) No person holding or having interest in licence for manufacture of country liquor or supply thereof from distillery or retail vendor shall hold or have interest in licence for retail sale of country liquor in area in which distillery is established in any area supplied from such distillery. (5) No person whose tender or bid at auction for grant of licence tinder Act or these Rules has been accepted but who fails to deposit within time allowed, security amount required to be deposited according to conditions of tender or auction in financial year 1972-73 or thereafter shall be entitled to hold any licence under Act or these Rules for period of three years from last date allowed for deposit of such security. " Licence forms conditions form of licences are prescribed under rule 93 and Form C.L.-I is form for sale of country liquor. Condition No. 3 of licence form prescribed under rule 93 reads as under: Our decision: above schemes of Rajasthan Excise Act and rules are relevant for purpose of understanding and appreciating question involved in present reference, namely, whether there is any prohibition for taking partner after licence is obtained in name of partnership firm in which newly introduced person was not originally partner at time of taking out of licence. Closely connected with it is next important question whether requirements of grant of permission, taking of permission, is matter of substance or form for introducing new partner. Yet another facet to be considered is whether induction of new partner by excise licence firm without permission of excise authorities would be against public policy as contemplated by section 23 of Contract Act. On thoughtful consideration of various facets of this controversy and principles of law as deduced in various judgments referred to above we are inclined to think that decision referred to by Mr. Mehta for convincing us and persuading us to hold that view of this court in Brij Mohan's case [1965] RLW 254 based on decision of Supreme Court in Govind Rao v. Nathmal decided on April 11, 1962, no longer holds field is difficult to be accepted. No doubt Nathmal's case was in respect of C. 1). and Berar Food Grains (Control) Order, 1945, which prohibited by section 3, clause (i), any person from dealing in foodgrains without licence but Mr. Mehta's efforts to distinguish case on ground that definition there was comprehensive as Word " person " was incorporated to mean group or association of persons like firm of partners is without any distinction and with no difference and, therefore, cannot succeed. As per resume of relevant provisions of Excise laws of Rajasthan extracted above, there is prohibition for possession and sale of liquor without licence and further under section 16(g) any (sic) material except on terms and conditions of licence. Similarly, section 19 prohibits any person from possession and manufacture of articles without licence to manufacture and sale of such articles. Clause (iv) of section 19 mentions person or class of persons. Again section 24 mentions grant of licence to person and section 31 provides for form of licence, restrictions and framing of rules. Under section 33, authority granting licence would require execution of counterpart agreement. Section 34 provides authority with power to cancel and suspend licence, if it is transferred or sub-let by persons holding licence without permission of authority or even if there has been any breach of conditions of licence or if person holding licence is convicted. It would thus be seen that distinction which Mr. Mehta wants to draw from case of Govind Rao v. Nathmal decided on April 11, 1962, is not permissible in view of above Excise law of Rajasthan. We may here also point out that partnership deed in present case further mentions that all partners were to contribute not only their capital but also skill and labour, which would naturally mean that partners who are licence-holders would be entitled to deal with country liquor. Sections 19 and 20 of Rajasthan Excise Act, 1950, expressly prohibit it. Section 54(a) and section 58, clause (c), of Act expressly provide that if infringement of any of provisions of this Act is committed, it would be punishable with imprisonment or fine or with both. It is thus clear that authority to newly inducted partners who were not there earlier in partnership at time of grant of licence and for whom no permission has been given by excise authorities, would be offence by excise licensees for all intents and purposes. This would mean that even previous convict or defaulter or person having bad antecedents, or person who is known as bootlegger for manufacture and sale of liquor by adulteration, playing with life of several innocent people would also be able to sit as licensee at liquor shop and sell it. These are all hazards and dangers against public and people, society and citizens as whole, which are being safeguarded by clause 3 in licence which expressly mentions that no partner would be inducted into partnership of such licensee without permission in writing from authorities. This would all show that there are several factors which are relevant and which directly affect public policy, public hygiene and risk to peoples' lives in this matter. Mr. Mehta's contention that no public policy is involved in incorporating clause (3) in licence and violation of it would not automatically mean that contract is violative of provisions of section 23 of Indian Contract Act or void ab initio cannot be accepted for reasons mentioned above. In our opinion, object of imposition of penalty and provisions for cancellation, suspension of licence in case of breach of any terms and conditions of licence, is safeguard of not only excise revenue but also for protecting public generally from such dangerous hazards and from such unscrupulous persons who as anti-social elements can make backdoor entry in liquor trade and play with lives of people. We have, therefore, no hesitation in holding that public policy is directly involved and condition No. 3 introduced in licence is not formal matter only for excise revenue but it is expanded on wider horizons and in its dimensions it covers public hygiene, public morality, public ethics, public safety, public security and is, therefore, public policy's various manifestations. As mentioned above, section 54 of Excise Act provides penalty for contravention of provisions of licence granted under Act. Section 34, clause (c), provides for cancellation, suspension and they are all provisions enacted by Legislature for protecting public health, and public hygiene and ensuring public morality and, therefore, they are all interlinked with public policy and they are not at all limited to excise revenue only. Mr. Mehta's contention that there is no prohibition and only requirement is of permission and, therefore, contract of partnership agreement is not illegal nor unlawful nor void ab initio now deserves consideration. imposition of condition in licence for obtaining permission and that in writing by competent excise authorities before entering into partnership with third parties is not mere formality. It is prohibition and prohibition also is of serious nature. In Durga Madira Sangh's case [1985] 153 ITR 226 (Raj), undoubtedly, this court, after quoting condition No. 3 of licence, held that even aforesaid condition of licence nowhere totally prohibits licensee from entering into partnership but it only requires that he should obtain permission. In this view of matter, this court held that there was no prohibition. We have given our thoughtful consideration to this aspect of matter and we feel that conditional permission or permission by such authority and in absence of that prohibition cannot result in finding that prohibition is not contemplated. prohibition can be of various types and patterns and varieties. To illustrate, foreign citizen cannot come to India or citizen of India cannot travel abroad except with passport and visa. Then, there are further restrictions. emphasis may be different but visa is condition which is prohibitory in nature and except that there is complete prohibition to enter foreign country. Similarly, person who comes here on visa can stay here only for certain period and after that by extension by competent authority but it would be simplifying matter, if it is said that there is no prohibition and it is only regulation. Regulations, restrictions, limitations and fetters may amount to prohibition because those conditions are basic bedrock and cannot be violated. object of insistence on permission is that certain unwarranted, unscrupulous and unsocial elements, defaulters or persons of objectionable history should not be allowed to do liquor business. If by backdoor they enter into partnership and thus become entitled, it would be mockery of prohibition. Yet another type of cases can be of previous convicts or persons who are defaulters or persons against whom there are certain government dues or persons whose bids have been rejected or persons who have been declared to be disqualified under any law for holding liquor licence if such persons by indirect backdoor entry become partners with licensee, then it would mean that all excise laws, prohibitions, safeguards, restrictions, etc., would be thrown to winds, and unscrupulous persons would manage to enter by backdoor by first giving bid in name of some persons benami and then entering into partnership with such licensee by inclusion and induction into partnership without even giving any intimation to excise authorities and without obtaining permission. We, therefore, feel that this is case of prohibition and that too based on public policy. Halsbury's Laws of England, IIIrd edition, Volume 8, para 245, at page 141, sums up law on point as under: " Where penalty is imposed by statute upon any person who does particular act, this may or may not imply prohibition of that act. It is question of construction in each case whether Legislature intended to prohibit doing of act altogether, or merely to make person who did it liable to pay penalty. If penalty is recurrent, that is to say, if it is imposed not merely once and for all but as often as act is done, this amounts to prohibition. Where object of Legislature in imposing penalty is merely protection of revenue, statute will not be construed as prohibiting act in respect of which penalty is imposed. But where penalty is imposed with object of protecting public, though it may also be for protection of revenue, act must be taken to be prohibited, and no action can be maintained by offending party on contract which is made in contravention of statute. crux of matter is as per observations (emphasis supplied) mentioned above, if penalty is imposed with object of protecting public, then it is case of prohibition and not case of device of revenue- earning only. Mr. Mehta's reliance on judgment of Gordhandas Kessowji v. Champsey Dossa, AIR 1921 PC 137, where licensee of salt manufacture was held not to contravene terms of licence, in view of provisions of section 11 of Bombay Salt Act, where it was not prohibited, is not applicable in instant case because there licensee admitted members of his family and others as partners for saving profits of business. In our opinion, unless licence conditions of that case are thoroughly seen, this judgment cannot enlighten us on questions as to what were conditions and, what were words and whether they were mandatory or directory and in what context and for what purpose conditions were laid down so as to apply that judgment in instant case before us. Then Mr. Mehta's reliance on judgment in Jer and Co. v. CIT [1971] 79 ITR 546 (SC), requires to be considered. There is no doubt that Jer and Co.'s case is of far-reaching importance in this branch of law. In that case, assessee-firm had two partners one of whom had obtained licence for wholesale vending of foreign liquor which was renewed from year to year. question being raised was whether firm was entitled to registration under section 26A of Indian Incometax Act, 1922. It was held by their Lordships of Supreme Court that licence did not prohibit holder from entering into partnership and it merely mentions that when licensee entered into partnership, question whether partnership was illegal did not arise and firm was allowed registration. It appears that after aforesaid decision of their Lordships of Supreme Court in Jer and Company's case [1971] 79 ITR 546, term that licence-holder should obtain permission in writing from excise authorities concerned before entering into partnership has been added in liquor licences. This has watered down effect of Jer and Company's case [1971] 79 ITR 546 (SC) as now there is express requirement of permission which in that case was conspicuously absent. In CIT v. Siyam Chand and Company (sic) Supreme Court followed Jer and Company's case [1971] 79 ITR 546 (SC). distinguishing feature from Rajasthan excise law in Punjab Fisheries Rules is that there is no prohibition from entering into partnership, so far as fisheries licences are concerned. Madras High Court also took same view in T. K. P. R. Ramanatha Chettiar & Bros. v. CIT [1969] 73 ITR 811 and National Roadways v. CIT [1975] 99 ITR 97. In cases of partnership firms running transport business on basis of permit standing in name of one of partners as there was no prohibition against partnership in Motor Vehicles Act, same view was taken by Division Bench of Madhya Pradesh High Court in Dayabhai and Company's case [1966] 59 ITR 364. Full Bench of Madhya Pradesh High Court in Smt. Janki Bat Chunilal v. Ratan Melu, AIR 1962 MP 117, in cases relating to transport business took same view. Here also there was no prohibition. It may be mentioned that Madras High Court in D. Mohideen Sahib & Co. v. CIT [1950] 18 ITR 200, has discussed matter in detail. Madras High Court in D. Mohideen Sahib & Co. v. CIT [1950] 18 ITR 200, has also discussed question of inclusion of partner in partnership rendering partnership illegal. Full Bench decision of Madras High Court in Velu Padayachi v. Sivasooriam Pillai, AIR 1950 Mad 444 [FB], further fortified view that such partnership becomes illegal and for illegal partnership income-tax authorities cannot grant registration. Madhya Pradesh High Court in series of cases, CIT v. Pagoda Hotel and Restaurant [1974] 93 ITR 271, CIT v. Sheonarayan Harnarayan [1975] 100 ITR 213 and CIT v. Kondra Durgaiya [1983] 143 ITR 315, has also affirmed same view that when new partner is taken after licence is given by excise authorities and permission is not taken for inclusion, then licence partnership comes to end becomes illegal, unlawful and cannot be enforced. It has been held in series of cases that in such cases of partnership, one partner cannot sue other for rendition of accounts, for amount which he has taken because such partnership is unlawful and is against public policy. Madhya Pradesh excise law and licence conditions are in pari materia with licence condition No. 3 of Form No. C.L.I.E. prescribed under section 42(E) of Rajasthan Excise Act, 1950, and rules 57, 67 (Jha) and 93 of Rajasthan Excise Rules, 1956 (page 495 of Rajasthan Local Laws by S. I,. Gupta, Vol. VI, E-1983 edn.; Govt. Notification dt. 5th February, 1964, Rajasthan Gazette, Extraordinary, Part-IV, dated 6th February, 1965), in respect of inclusion of new partners in liquor licence business. In our opinion, above judgment of Madhya Pradesh High Court squarely applies to facts of instant case and we express our respectful agreement with above view and hold that such partnership being illegal cannot be registered under Income- tax Act. view of Orissa High Court in Mohapatra Bhandar v. CIT 1968] 58 ITR 671, is also same and so is case of Rajasthan High Court in Brij Mohan v. Vakharia [1965] RLW 254. Kerala High Court in CIT v. Union Tobacco Co. [1961] 41 ITR 115, has taken similar view and held that such partnership is illegal and cannot claim registration as of right. Punjab and Haryana High Court in successive judgments, first being [1962] 44 ITR 835 (CIT v. Benarsi Das) and then Lalchand Mohan Lal Fazilka v. CIT [1967] 65 ITR 418 and third one CIT v. Hardit Singh Pal Chand & Co. [1979] 120 ITR 289, have taken same view that such partnership becomes illegal and no contract can be enforced even for rendition of accounts by partners. Such partnership, therefore, cannot claim registration under Indian Income-tax Act. Andhra Pradesh High Court in CIT v. Krishna Reddy & Co. [1962] 46 ITR 784, V. Basavayya v. N. Kottayya, AIR 1964 AP 145, and Dinsawji v. Abdul Rasool Khan, AIR 1967 AP 119, have also taken similar view and supported view which was taken earlier. It would thus be seen that so far as cases of liquor licences are concerned, in view of prohibition introduced by Rajasthan excise licensing conditions and various provisions of Excise Act and rules making it liable to punishment and also liable to confiscation, cancellation and suspension on this ground alone goes to show that Legislature had expressed intention to treat such firm as illegal and unlawful. Madras High Court in T. K. P. R. Ramanatha Chettiar & Brothers v. CIT [1969] 73 ITR 811 and in National Roadways v. CIT [1975] 99 ITR 97, in cases of permit standing in name of one partner as there was no prohibition against partnership in Motor Vehicles Act, although there is prohibition against transfer of permit, took view that partnership is legal. Division Bench of Madhya Pradesh High Court in Dayabhai v. CIT [1966] 59 ITR 364 and Full Bench of Madhya Pradesh High Court in Smt. Janki Bai Chunnilal v. Ratan Melu AIR 1962 MP 117, and other cases of partnerships relating to transport business, also held partnership legal, as there was no prohibition in those laws. These cases are clearly distinguishable being based on different facts and laws as mentioned above. On thoughtful and thorough consideration of important decisions relied upon by Mr. Mehta and also by learned judges deciding two references earlier, we find that they are not applicable, as facts in present case are different, and so also relevant law, rules and conditions of licence having force of law. Let us now discuss and point out distinguishing features of those cases: Umacharan Shah and Bros. v. CIT [1959] 37 ITR 271 (SC): excise licence was operated by partnership of joint family members though licence was in name of individual member of family. Section 42(1) of Bengal Excise Act prohibited transfer or sub-letting. There was no prohibition for inducting partners and, therefore, Supreme Court directed registration. It would thus be seen that Bengal Excise Act was not at all violated. In instant case, Rajasthan Law prescribes licence conditions and they are notified with every tender form and at time of auction. Condition No. 3 extracted above expressly prohibits inclusion of any person as partner without written permission. It is further provided in Rajasthan Excise Act and rules as well that conditions of violations would be treated as statutory violation and hence actionable. We cannot apply Bombay Excise law to Rajasthan without having similar licence conditions. Jer and Co. v. CIT [1971] 79 ITR 546 (SC) has not been correctly understood by most of High Courts, on whose judgments reliance has been placed by Mr. Mehta. crux of distinction based on non-application of rule 322 of Excise Manual, where licence is Form FL II, has tilted fate from illegality of partnership to legality. relevant discussion is as under (at page 548): " Commissioner and High Court proceeded on footing that licence was governed by rule 322 which prohibited holder of licence from entering into partnership with another person. But licence, it is clear from record, was in Form FL II issued under U.P. Excise Manual. licence does not prohibit holder from entering into partnership by holder of licence: it merely provides that licence shall not be sub-let or transferred. Since there is no prohibition against entry by holder of licence into partnership, question whether partnership was illegal does not arise. firm was entitled on that account to registration. It is somewhat unfortunate that attention of Commissioner and High Court was not invited to form in which licence was issued by excise authorities. They proceeded to decide case on footing that rule 322 of Excise Manual applied. But that rule has no application here. " (Emphasis supplied) We have already pointed out that in our instant case unlike Form FL 11, Rajasthan Form No. C.L.I.E. contains condition No. 3 which expressly prohibits new partners without written permission of excise authorities. Therefore, all decisions of High Courts which relied upon Jer & Co.'s case judgment [1971] 79 ITR 546 (SC)-registration has been allowed in spite of provisions like clause 3 of licence-are based on error of in exactitude in understanding implications of Jer & Co.'s case [1971] 79 ITR 546 (SC). Our High Court's two judgments of Division Bench in Durga Madira Sangh's case [1985] 153 ITR 226 and CIT v. Rooplal Danchand's case [1986] 162 ITR 742 (D.B. Income-tax Reference No. IS of 1980 decided on February 10, 1986, at Jodhpur), with due respect, fall in this category. We may now turn to " wagering contracts " judgment in Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781, on which tremendous emphasis has been laid by Mr. Mehta. In order to appreciate this decision, we must analyse deduction in para. 28 which reads as under (p. 797 of 1959 AIR): " 28. To summarize: common law of England and that of India have never struck down contracts of wager on ground of public policy; indeed they have always been held to be not illegal notwithstanding fact that statute declared them void. Even after contracts of wager were declared to be void in England, collateral contracts were enforced till passing of Gaming Act of 1892, and in India, except in State of Bombay, they have been enforced even after passing of Act No. 21 of 1848, which was substituted by section 30 of Contract Act. moral prohibitions in Hindu law texts against gambling were not only not legally enforced but were allowed to fall into desuetude. In practice, though gambling is controlled in specific matters, it has not been declared illegal and there is no law declaring wagering illegal. Indeed, some of gambling practices are perennial source of income to State. In circumstances, it is not possible to hold that there is any definite head or principle of public policy evolved by courts or laid down by precedents which would directly apply to wagering contracts. Even if it is permissible for courts to evolve new head of public policy under extraordinary circumstances giving rise to incontestable harm to society, we cannot say that wager is one of such instances of exceptional gravity, for it has been recognised for centuries and has been tolerated by public and State alike. If it has any such tendency, it is for Legislature to make law prohibiting such contracts and declaring them illegal and not for this court to resort to judicial legislation. " Before above in para. 20, deductions Nos. (5) and (6) are relevant and they are as under (p. 792 of 1959 AIR): " (5). Section 30 of Indian Contract Act is based upon provisions of section 18 of Gaining Act, 1845, and though wager is void and unenforceable, it is not forbidden by law and, therefore, object of collateral agreement is not unlawful under section 23 of Contract Act; and (6) partnership being agreement within meaning of section 23 of Indian Contract Act, it is not unlawful, though its object is to carry on wagering transactions. We, therefore, hold that in present case partnership is not unlawful within meaning of section 23(a) of Contract Act. " above judgment is based on provisions of Gaming Act and directly it has got no application in case where partnership has been formed by inclusion of new parties in sale of liquor business without permission of excise authorities. We find that in Rajasthan Excise law and as per licence condition No. 3 of Form No. C.L.I.E. & C.L. (1) G. prescribed under section 42E and rules 57, 67 (Jha) and 93, since there is express prohibition of new partnership without written permission, such partnership is forbidden by law, and, therefore, it is unlawful, for, section 23 of Indian Contract Act, as also section 34(c) of Rajasthan Excise Act render licences liable to cancellation on breach of conditions of licence; and sections 54 and 58(c) make it punishable with imprisonment or fine. We, therefore, are of view that view taken by this court in Durga Madira Sangh's case [1985] 153 ITR 226 and Rooplal Danchand's case [1986] 162 ITR 742, (D.B.I.T. Reference No. 15 of 1980, decided on February 10, 1986), cannot be accepted as laying down correct law and with due respect, we find insurmountable legal hurdle in persuading us to agree to confirm it, as we are of contrary view. decision in K. M. Vishwanatha Pillai v. K. M. Shanmugham Pillai, AIR 1969 SC 493, is on Motor Vehicles Act provisions-where real owner holding permit in benamidar's name has been held to be entitled to valid and lawful operation of permits. It fails to support Mr. Mehta's contention as facts are quite different in our instant case. We are firmly of view that none of principles laid down in decisions of apex court in K. M. Vishwanatha Pillai v. K. M. Shanmugham Pillai, AIR 1969 SC 493, Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781, Umacharan Shah & Bros. v. CIT [1959] 37 ITR 271 (SC), Jer & Co. v. CIT [1971] 79 ITR 546 (SC) and Gordhandas Kessowji v. Champsey Dossa, AIR 1921 PC 137, can result in treating present partnership as legal in spite of specific prohibition contained in licence condition No. 3, which is prescribed under section 42 of Act and rules 93, 57 and 67 (Jha). Since it is illegal, logical effect would be to not recognise it for registration. illegal act can never be treated as genuine and registration would result in providing protective umbrella to illegal activities which judicial court should never do by expanding connotation " genuine " to unlawful, illegal, prohibited acts also. Consequently, we hold that such partnership cannot be registered under Indian Income-tax Act. Division Bench making reference to us have referred entire case for decision as it was of view that view taken in Durga Madira Sangh v. CIT [1985] 153 ITR 226 (Raj) is not correct and requires reconsideration. We are in agreement with view of Division Bench expressed in its judgment dated May 6, 1985, in instant case and on account of additional reasons which we have given above, we express our agreement with view taken by Madras High Court, Kerala High Court, Andhra Pradesh High Court, Madhya Pradesh High Court, Punjab & Haryana High Court and Orissa High Court in above referred cases, in which it has been held that inclusion of new persons as partners in excise licence for country liquor without permission of excise authorities makes partnership illegal and opposed to public policy. We, therefore, hold that contrary view taken in Durga Madira Sangh's case [1985] 153 ITR 226 and also another judgment of this court in CIT v. Rooplal Danchand [1986] 162 ITR 742 (D.B. Incometax Reference No. 15 of 1980, decided on February 10, 1986, at jodhpur), holding that such firm is entitled to registration under section 185 of Income-tax Act, 1961, and such firms are valid and object of agreement is not against public policy, cannot be accepted as good law. We are of opinion that, on facts and circumstances of present case, Tribunal was right in holding that firm was not valid and that object of agreement was of such nature that if permitted, it would defeat public policy as contained in Rajasthan Excise Act, 1950. We further hold that Tribunal was justified in holding that firm was not valid and, therefore, not entitled to registration under section 185 of Income-tax Act, 1961. In this view of matter, both questions referred by Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, are, therefore, answered in affirmative. Since questions of law are genuinely and seriously debatable, we make no order as to costs. *** Motilal Chunnilal v. Commissioner of Income-tax