IMPORTANT POINT
The inhibition contained in Section 14 of the Andhra Pradesh (Telangana Area) Abkari Act will apply only in a case where the lessee declares any person as its partner and when the main partnership and the sub-partnership are, for the purpose of law, distinct and different entities, to such a situation Section 14 of the Act is not attracted.

JUDGMENT

Paripoornan, J.-The Revenue has filed this appeal against the judgment of the High Court of Andhra Pradesh dated 22.8.1977 rendered in Case Referred No. 45 of 1975. The High Court granted a certificate under Section 261 of the Income Tax Act to appeal to this Court, in S.C.L. Petition No. 57 of 1978. The assessee is the respondent in this appeal.

Since the respondent (assessee) was not represented, we requested Sri V.A. Bobde (senior counsel) to assist us. We heard counsel for the Revenue Sri J. Ramamurthy and Sri V.A. Bobde.

2. The short question involved in this Appeal is:-

Whether the respondent-assessee firm is entitled to registration under Income Tax Act for the year 1966-67? The Income Tax Officer by his order passed under Section 185 of the Income-tax Act, 1961, dated 28.12.1970, held that the respondent-assessee- sub-partnership - contravenes the provisions of Section 14 of the Andhra Pradesh (Telangana Area) Abkari Act (hereinafter referred to as the Abkari Act ) and so, the sub-partnership should be considered as void and illegal. Section 14 of the Act is to the following effect :-

"No lessee shall, except with the permission of Government, declare any person to be his partner; and such partner shall not be competent to act as such until he has obtained a licence to that effect from the Collector or any other competent officer."

Registration was refused. The said order was confirmed in appeal by the Appellate Assistant Commissioner by order dated 28.2.1972. In further appeal, the Income-tax Appellate Tribunal (the Tribunal) in I.T.A. No. 210 (Hyd)/1972-73 by order dated 31.12.1973, held that the firm (sub-partnership) is valid and entitled to registration. In rendering the said order, the Tribunal noticed that another Bench of the Tribunal in I.T.A. No. 1028 (Hyd.) of 1969-70 and connected appeals had by an earlier order dated 30.6.1972, held that a sub-partnership on identical lines was not hit by Section 14 of the Abkari Act, Concurring with the said view, the Tribunal further held that the business of sub-partnership was not the same as that of the main partnership and all the insignia of a valid partnership are present in this case and so, it is valid and entitled to registration. It is thereafter, at the instance of the Revenue, the Appellate Tribunal referred the following question of law for the decision, of the Andhra Pradesh High Court.

"Whether on the facts and in the circumstances of the case, the sub-partnership is entitled to the benefits of registration under the Income-tax Act, 1961 for the assessment year 1966-67?"

By the time the said reference came up for final hearing before the High Court, the reference made by the Tribunal of an identical question in the connected cases arising from I.T.A.No. 1028 (Hyd) of 1969-70 was heard and decided by the High Court, holding that the sub-partnership in the said case, is valid and entitled to registration, vide judgment in Additional Income Tax Commissioner, Hyderabad v. D.G.G. Ramakishan & Co.1. When the instant reference came up before the High Court, the earlier decision on the identical matter was noticed and the High Court answered the question in the affirmative and in favour of the assessee vide judgment dated 2.8.1977. It is thereafter, the Revenue moved the High Court in SCL Petition No. 57/1978 under section 261 of the Income-tax Act and having obtained a certificate to appeal to this Court vide order dated 10.3.1978, has filed the above appeal.

4. At this stage, one fact deserves to be noticed. The decision of the Andhra Pradesh High Court rendered in Additional Income Tax Commissioner, Hyderabad v. D.G.G. Ramakishan & Co. (supra), came up in appeal before this Court, in Additional Commissioner of Income Tax v. Degaon Ganga Reddy G. Ramakrishna and Co. and others2, and a Bench of this Court affirmed the said decision. It was noticed that this Court had in Muralidhar Himatsingka v. CIT3 held that a valid sub-partnership can be entered into by a p