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PETITIONER: BIHARILAL JAISWAL ETC.

       Vs.

RESPONDENT: THE COMMISSIONER OF INCOME TAX ETC.

DATE OF JUDGMENT16/11/1995

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) KIRPAL B.N. (J)

CITATION:  1996 SCC  (1) 443        JT 1995 (8)   257  1995 SCALE  (6)508

ACT:

HEADNOTE:

JUDGMENT:                          J U D G M E N T B.P. JEEVAN REDDY,J.      These appeals  are preferred  against the  judgment and order  of  the  Madhya  Pradesh  High  Court  rejecting  the applications filed  by the assesside under Section 256(2) of the Income  Tax Act,  1961. The  assessee had  requested the High Court  to direct  the Tribunal  to state  the following question of law for its opinion:      "Whether  on   the  facts   and  in  the      circumstances of the case, the applicant      could  be   refused  registration  under      section 185  of the Income-tax Act, 1961      on the  ground that its constitution was      illegal for  breach of the provisions of      clause  VI   of  the   General   Licence      Conditions made  under the Excise Rules,      although no  action  was  taken  by  the      Collector  for   cancellation   of   the      licence under  clause 14  of the Licence      in  Form   C.S.3,  inspite   of  written      intimation, dated  27.4.1967  about  its      constitution."      The High  Court rejected the applications on the ground that the  question sought  to be  raised by the assessee was concluded against  it by  two decisions of that Court, viz., Commissioner of  Income Tax.  Madhya Pradesh  v. Sheonarayan Harnarayan  [1973   Tax  Law  Reporter  1186  =  (1975)  100 I.T.R.213] and Commissioner of Income Tax, Madhya Pradesh v. Pagoda Hotel and Restaurant [(1974) 93 I.T.R.2710.      A licence  for retail  sale  of  country  spirit  under supply system  in form C.S.No.3 of the Madhya Pradesh Excise Rules, 1960  was obtained by Biharilal Jaiswal in respect of twenty two  out-stall shops  in Tehsil  Sarangarh,  District Raigarh in  the public  auction held  in January,  1968. The licence was  effective for the period commencing on April 1,

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1968 and  ending with  March  31,  1969.  Biharilal  Jaiswal entered into a Partnership with ten other persons to conduct the business  under the  said licence.  The  partnership  is evidenced by  the deed dated August 30, 1968. An application for grant  of registration  to the  said firm under Sections 184 and  185 of the Act was filed in Formell. The income Tax Officer rejected  the application  for registration  on  the ground that  the partnership having been formed in violation of clause  (VI) of the General Licence Conditions Prescribed by the  Madhya Pradesh  Excise Rules  is illegal and cannot, therefore, claim  registration under  the Income Tax Act. On appeal, the  Appellate Assistant  Commissioner directed  the Income Tax  Officer to  grant registration  as  prayed  for, against which  order the  Revenue appealed  to the Tribunal. The Tribunal  reversed the  order of the Appellate Assistant Commissioner and  restored  the  order  of  the  Income  Tax Officer. Thereupon,  the assessee applied to the Tribunal to refer two  questions under  Section 256(1)  of the Act which was refused. The application to the High Court under Section 256(2) to  refer the  aforesaid (consolidated)  question was also rejected, as stated above.      Clause  (VI)   of  the   General   Licence   Conditions Prescribed by the Excise Rules reads thus:      "VI. TRANSFER OR SUBLEASE OF LICENCE: NO      privilege of  supply or  sale  shall  be      sold,  transferred  or  sub-leased,  nor      shall a  holder of  any  such  privilege      enter into a partnership for the working      of such  privilege in  any way or manner      without the  written permission  of  the      Collector, which  shall be  endorsed  on      the  licence.   A  partner,  sub-lessee,      transferee shall  be bound  by  all  the      conditions  of   the  licence,  but  the      original licencee also shall continue to      be responsible  to the  State Government      for the  due payment of the licence fees      and proper  working of  the shop, except      that in  the  case  of  a  transfer  his      responsibility shall case as soon as the      transfer is endorsed on the licence."      Another  condition   of  licence,   viz.,  clause  (14) provided that  "on breach  of any  of the conditions of this licence or  of any  of the  provisions of the Madhya Pradesh Excise Act, 1915, or the Rules made thereunder, this licence may be cancelled by the Collector."      A few  clauses in  the partnership  deed  may  also  be noticed. the preamble to the partnership deed reads:      "WHEREAS   Shri   Girdharilal   son   of      Buddhulal  Jaiswal   of  Ambikapur   has      secured  the   excise  contract  of  two      Liquor shops  Goda Chawk  and Talaiya in      Bhopal   in    Gehore    District    for      Rs.3,05,000,00 and  1,50,000.00  in  his      name in  the open  auction held  on 31st      January, 1968  for the  period from  Ist      April  1968   to  31st  March  1969  and      whereas as  agreed between the aforesaid      persons  and   as  he  alone  unable  to      execute the  same contract  individually      for  want   of  funds  and  whereas  the      parties No.1  to 8  named  above  having      agreed to  carry on  the above  contract      business in partnership with effect from      1.4.68 desire  to reduce  in writing and

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    place in  a legal  form  the  terms  and      conditions under  which they have agreed      to carry  on the  partnership  business,      they do  hereby  declare  and  stipulate      that they have been partners in the firm      named and  styled as GIRDHARILAL JAISWAL      LIQUOR CONTRACTOR  BHOPAL on  the  terms      and conditions as detailed below:"      Clause  (7)   of  the  partnership  deed      provided that:      "No partner  shall be  entitled  to  any      remuneration  for  taking  part  in  the      conduct of  the firms  and that  all the      partners shall  carry on the same to the      common advantage,  be just  and faithful      to  each  other  and  shall  render  the      accounts and  full  information  of  all      things effective the firms business."      In Pagoda Hotel and Restaurant, a Division Bench of the Madhya Pradesh  High Court  had opined  that the prohibition contained in  clause (VI)  of the General Licence Conditions is absolute  and is  couched in  wide terms.  Since the said clause expressly  prohibited the  entering into  partnership for working the business/privilege under the licence, it was held, no  partnership could  have  been  entered  into  with respect to  the said business. Accordingly, it was held that no registration  can be  granted under  Section 26(A) of the Indian Income  Tax Act, 1922 to such an invalid partnership. The High Court distinguished the decisions of the Bombay and Patna High  Court  in  Champsey  v.  Gordhandas  (A.I.R.1917 Bom.250), Commissioner  of Income  Tax v.  Prakash Ram Gupta [(1969) 72 I.T.R.366 (Patna)] and Commissioner of Income Tax v. Mandal  (N.C.) & Co. [(1969) 72 I.T.R.767 (Patna)] on the ground that  the statutory  provisions  concerned  in  those cases merely  prohibited the  transfer of  the privilege but did  not   contain  a   prohibition  against  entering  into partnership  whereas  the  Madhya  Pradesh  Rules  expressly prohibited the  entering  into  partnership  as  well.  This decision  was   followed  in   Sheonarayan  Harnarayan.  The Division Bench  rejected the  contention put  forward by the assessee that  the decision  in pagoda  Hotel and Restaurant must be  deemed to  have been  overruled by  the decision of this Court  in Jer and Company v. Commissioner of Income Tax [(1971) 79  I.T.R.546). The  High Court pointed out that the statutory  provision   concerned  in  Jer  and  Company  was altogether different  from the  one contained  in the Madhya Pradesh Excise Rules. The correctness of the said decisions, which have  been followed  in the  order under  appeal,  are questioned in these appeals.      Sub-section (1)  of Section 184 (the other sub-sections being not  relevant for the present purpose are not referred to) read as follows at the relevant time:      "184. Application for registration.--      (1) An application for registration of a      firm for the purposes of this Act may be      made to the Income Tax Officer on behalf      of any firm, if--      (i) the  partnership is  evidenced by an      instrument; and      (ii)  the   individual  shares   of  the      partners   are    specified   in    that      instrument."      Sub-section (1)  of section  185, which too is relevant for our purpose, read thus at the relevant time:      "185.   Procedure    on    receipt    of

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    application,--(1)  On   receipt  of   an      application for  the registration  of  a      firm,  the  Income  Tax  Officer,  shall      inquire into the genuineness of the firm      and its constitution as specified in the      instrument of partnership, and--      (a) if  he is satisfied that there is or      was  during   the   previous   year   in      existence  a   genuine  firm   with  the      constitution so specified, he shall pass      an order in writing registering the firm      for the assessment year,      (b) if  he is not so satisfied, he shall      pass an  order  in  writing  reusing  to      register the firm."      The position emerging from the above two sub-section is this: and  application for  registration of  a firm  for the purposes of  the Act  could be made on behalf of any firm if the  partnership   was  evidenced  by  instrument  and  that instrument specified  the individual shares of the partners. On such  application being filed, the Income Tax Officer was obliged to  enquire into the genuineness of the firm and its constitution as  specified in  the instrument of partnership and if,  on such  enquiry, he  was satisfied  that a genuine firm with the constitution as specified in the instrument of partnership was  in existence  during the  relevant previous year, he  was obliged to grant registration. If, however, he was not so satisfied, he was to reject the application.      In the  present case,  the partnership was evidenced by an instrument  of partnership which specified the individual shares  of  the  partners.  The  truth  of  the  partnership agreement was not disputed by the Revenue ____________________________________________________________ *    An explanation  was added to sub-section (1) of Section 185 by  the Taxation  Laws (Amendment) Act, 1970 with effect from April 1, 1971, which reads thus: "Explanation.--For the purposes of  this section  and section 186, a firm shall not be regarded  as a  genuine firm  if any  partner of the firm was, in  relation to  the whole  or any part of his share in the income  or property  of the firm, at any time during the previous year,  a benamidar  of any other person to whom the first-mentioned partner  does not  stand in the relationship of a spouse or minor child." Though this explanation was not there during the assessment year concerned herein, it is yet indicative of Parliament’s thinking. The explanation frowned upon benami partners. It declared that existence of a benami partner renders  the  partnership  not  genuine  within  the meaning of  Section 185(1),  unless, of  course, such benami partner happened  to be  the spouse or minor child. The said explanation was  substituted by  a more  elaborate one  with effect from  April 1,  1976 by the Taxation Laws (Amendment) Act, 1975.  We need  not refer to it for the purpose of this case,  since   it   merely   eludicates   the   pre-existing explanation. nor was  it disputed  that the  partners as specified in the instrument of  partnership did the business under the excise licence for  the relevant  excise year/financial year. It is equally not  in dispute  that the  written permission of the Collector  was   not  obtained   for  entering   into   such partnership, though  the assessee says that they had applied for  the   same.  The   only  question  is  whether  such  a partnership could  not be  called a  genuine partnership and whether such  a partnership was dis-entitled to registration under the  Act because  of the fact that it was entered into without obtaining  the written  permission of the Collector.

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In other  words, the question is whether a partnership which is prohibited  by the  law governing  the  licence  and  the business under  the licence  can yet be granted registration under the  Income Tax  Act. We  have  set  but  hereinbefore clause  (VI)  of  the  General  Conditions  of  Licence.  It provided that (a) the privilege of supply or sale granted to the licencee  shall not  be sold,  transferred or sub-leased without the  written permission of the Collector which shall be  endorsed   on  the  licence,  (b)  the  holder  of  such licence/privilege shall not enter into a partnership for the working of  such privilege  in any way or manner without the written permission  of the collector which shall be endorsed on  the   licence,  and  (c)  a  partner,  sub-lesses  or  a transferee shall  be bound  by all the conditions of licence but that did not mean that the original licencee was free of any obligations  under the  licence. The  original  licencee continued to  be responsible to the State Government for the due payment  of the  licence fees  and proper working of the shops except  in the  case of a transfer of licence in which case the  the responsibility  of the original licencee cased as soon  as the transfer was endorsed on the licence. Clause (14) of  the Licence  further provided that on breach of any of the conditions of licence or any of the provisions of the Madhya Pradesh  Excise Act or the Rules made thereunder, the licence may be cancelled by the Collector.      The contention  of Sri  Pramod Swarup,  learned counsel for the  appellant is  that  the  prohibition  contained  in clause (VI)  of the  General Licence  Conditions Provided by the Madhya  Pradesh Excise  Rules has  no relevance  in  the matter of grant of registration under Section 184 and 185 of the Income  Tax Act.  May be,  the learned counsel says, the said partnership  would not be recognised by, and may not be able to  enforce any  of their  rights against,  the  Excise Department but  so far  as the  Income Tax Act is concerned, such a  partnership existed  in fact and did actually do the business during  the relevant previous year. In other words, the learned  counsel says,  the partnership  was  a  genuine partnership.  It   was  evidenced   by  an   instrument   of partnership specifying the individual shares of the partners and, therefore,  entitled  to  grant  of  registration.  The learned counsel  for the Revenue, on the other hand, submits that since  the excise law in force in Madhya Pradesh at the relevant time  prohibited the  entering into  of partnership for the  working of  the privilege granted under the licence without the  written permission  of the  Collector, no  such partnership can  be recognised in law. What is prohibited by one enactment  cannot be recognised or sanctioned by another enactment. This should be so, he says, even if the enactment prohibiting the partnership is a State enactment and the Act whereunder  registration   is  sought   is  a  parliamentary enactment; otherwise,  it would be opposed to public policy. The learned  counsel submits  that  an  illegal  partnership cannot be  characterised as a genuine partnership within the meaning of  Section 185(1).  Section 23 of the Contract Act, the  learned   counsel  points   out,  declares  that  every agreement of  which the  object or consideration is unlawful is void.  Section 23  provides, inter  alia, that where "the object of  an agreement  is......of such  a nature  that  if permitted, it would defeat the provisions of any law", it is an unlawful  agreement and accordingly void.] The Income Tax Act cannot sanction, recognize or grant registration to such a partnership agreement, he says.      The question  concerned herein  has been  the  subject- matter of  consideration by  this Court  as well  as several High Courts  in the  country. We  shall first  refer to  the

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decisions of this Court.      In Umacharan  Shaw &  Bros. v.  Commissioner of  Income Tax, West  Bengal [(1959)  37 I.T.R.271], the question arose with reference  to Section 26A of the Indian Income Tax Act. 1922. Section  42(1)(a) of  the Bengal  Excise Act  provided that "subject  to such  restrictions as the State Government may prescribe, the authority who granted any licence, permit or pass under this Act may cancel or suspend it....(a) if it is transferred  or sub-let by the holder thereof without the permission of  the said  authority". The  Tribunal  had,  of course,  denied  the  registration  not  on  the  ground  of illegality of  partnership but  on the ground that a genuine partnership had not come into existence. Even so, this Court referred to  the said provision of the Bengal Excise Act and observed, "(T)here  was no evidence that the excise licences were transferred  or sub-let.  The three  shops, it appears, were  managed   separately  and  their  accounts  were  kept distinct. There was thus nothing which militated against the partnership and  it cannot  be said  that this  affected the genuineness of  the agreement."  Having thus  observed, this Court went  into the  material relevant  on the  question of genuineness of  the partnership  and held  that there was no material upon which the Income Tax Officer could come to the conclusion that  the firm  was not  genuine. We  may mention that this  decision is  not really  relevant on the question arising in these appeals, yet we have referred to it because it happened  to be  the first  decision relied  upon by  the learned counsel for the assessee appellant.      The next decision relied upon is in Jer and Company. It was a  case of the licencee entering into a partnership with others for doing the business under the licences. Though the High Court  had proceeded  on the  footing that  the  excise licence concerned  therein was  governed by  Rule 322, which prohibited the  holder of  the licence  from entering into a partnership with  another person,  this Court  found,  as  a matter of  fact, that  the licence concerned therein was not governed by  Rule 322  but by  a different rule in the Uttar Pradesh Excise  Rules. The licence was issued in Form FL-II. It  did   not  prohibit  the  licencee  from  entering  into partnership with  respect to the business under the licence. It merely  provided that  the licencee  shall not sub-let or transfer the licence. In this view of the matter, this Court held that  the question  whether the partnership was illegal did not  arise in  that case  and the  firm was  entitled to registration. This is what the Court said:      "The Commissioner  and  the  High  Court      proceeded  on   the  footing   that  the      licence was  governed by  rule 322 which      prohibited the  holder  of  the  licence      from entering  into a  partnership  with      another person.  But the  licence, it is      clear from the record, was in Form FL II      issued under  the U.P.Excise Manual. The      licence does  not  prohibit  the  holder      from entering  into partnership  by  the      holder  of   the  licence;   it   merely      provides that  the licence  shall not be      sub-let or  transferred. Since  there is      no  prohibition  against  entry  by  the      holder of the licence into a partnership      the question whether the partnership was      illegal does  not arise.  The  firm  was      entitled    on     that    account    to      registration. It is somewhat unfortunate      that the  attention of  the Commissioner

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    and the  High Court  was not  invited to      the form in which the licence was issued      by   the    excise   authorities.   They      proceeded to  decide  the  case  on  the      footing that  rule  322  of  the  Excise      Manual applied.  But that  rule  has  no      application here."      The learned  counsel for  the Revenue  understands  the said decision  as laving  down that a partnership prohibited by the  excise law  cannot be granted registration under the Income Tax  Act, while the learned counsel for the assessees reads it  differently. Be  that as  it may, the fact remains that the  rule  concerned  in  the  said  decision  did  not prohibit entering  into partnership  by  the  licencee  with respect to  the business  under the  licence. It was for the said reason,  this Court held that the partnership cannot be called illegal and cannot be refused registration.      So  far   as  the  High  Courts  are  concerned,  their decisions  turned   upon  the  particular  language  of  the statutory provisions  concerned in  each  case.  Several  of these decision  have  been  referred  to  in  an  exhaustive decision of the Andhra Pradesh High Court in Commissioner of Income Tax.  Andhra Pradesh-IV v. Nalli Venkataramana & Ors. [(1984) 145  I.T.R.759] rendered  with reference  to  Andhra Pradesh Excise  Rules. Rule  19(1)  of  the  Andhra  Pradesh Excise Rules, 1969 provided that "(1) the licencee shall not transfer the licence for the sale of arrack and toddy to any other persons".  At the  same time,  sub-rule (2) of Rule 19 provided that  "(2) where  a licence  is granted jointly, no licencee shall  include or  exclude any  partner except with the previous permission of the licencing authority." In both the cases  considered in  the said decision, the licence was granted in  the name  of an  individual who  in turn entered into a  partnership with  others for conducting and carrying on the  business under the said licence. The High Court took the view  that  so  far  as  sub-rule  (1)  of  Rule  19  is concerned, it  did not  prohibit entering into a partnership with respect  to the  business under the licence and that it merely prohibited  the transfer  of  the  licence.  On  this basis, the High Court held that the partnership entered into by the  licencee(s) in  the cases before them cannot be said to be opposed to or violative of sub-rule (1) of Rule 19. So far as  sub-rule (2) of Rule 19 is concerned, the High Court construed it  as not  applicable to a case where the licence was granted  in the  name of a single person. The High Court opined that  sub-rule (2) applied only where the licence was granted jointly in the name of two or more persons, i.e., to a partnership, in which case, it held, the sub-rule provided that no  partners shall  be excluded or included without the previous permission of the licencing authority. In the words of the  High Court,  the position  under Rule 19(2) is this: "Rule  19(2)   requires  that  whenever  a  new  partner  is introduced or  excluded,  the  previous  permission  of  the licencing  authority   should  be   obtained.  But  if  such permission is  not obtained, the partnership is not rendered illegal. As  between the  partners it  continues to be valid and entitled  to registration  under the  I.T.Act."  On  the above  reasoning,   the  High   Court  held   that  the  two partnership agreements  before them  did not  violate either sub-rule (1)  or sub-rule  (2) of  Rule  19  and  cannot  be refused registration  under Section  185 of  the Income  Tax Act. The  correctness of  the interpretation  placed by  the High Court on Rule 19(2) does not fall for our consideration herein. Even so, we must say that the proposition, quoted by us hereinabove,  is unacceptable as will be evident from the

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following discussion.      In our opinion, the correct position appears to be this we are confining ourselves to partnerships entered into with respect to  a licence/permit  granted under the State Excise enactments): these  enactments deal  with indicating liquor, that is  to say,  the production,  manufacture,  possession, transport, purchase  and sale of intoxicating liquors (Entry 8 of  List-II of  the Seventh  Schedule to the Constitution) and other noxious substances besides providing for duties of excise referred to in Entry 51 of the said List. It has been held  by   this  Court  repeatedly  that  no  person  has  a fundamental right  to deal  or trade in intoxicating liqdors and that  the State  is entitled  to prohibit and/or closely regulate   their    production,   manufacture,   possession, transport, purchase  and sale.  It is enough to refer to the recent Constitution  Bench judgment  in Khoday  Distilleries Ltd.  &  Ors.  v.  State  of  Karnataka  &  Ors.  (1995  (1) S.C.C.574) wherein  all the  earlier decisions of this Court have been  referred and  the proposition aforesaid affirmed. The right of a citizen to deal in these intoxicating liquors is only  to the  extent it  is provided for and permitted by the Act  and the  Rules made  thereunder.  Take  the  Madhya Pradesh Act, with which are concerned herein. Clause (VI) of the General  Licence Conditions  - it  is not  disputed that these conditions  are  statutory  in  character  -  provides pressly that a holder of a licence/privilege shall not enter into a  partnership for the working of such privilege in any way  or   manner  without  the  written  permission  of  the Collector,  which   permission  shall  be  endorsed  on  the licence. This  condition is binding upon the licence. If so, he cannot enter into a partnership nor can there be, in law, a partnership  with  respect  to  the  privilege  (business) granted under  the licence.  No person, and no licencee, can claim any  right contrary  to the said provision. The object underlying  the  said  clause  is  self-evident.  Since  the licence is  granted for dealing in intoxicating liquors, the business wherein  is res extra commercium - and also because they are  supposed to be harmful and injurious to health and morals of  the members  of  the  society  close  control  is envisaged and  provided over  the business  carried on under the licence. This object will be defeated if the licencee is permitted to  bring in  strangers into  the business,  which would mean  that instead  of the  licencee carrying  on  the business, it would be carried on by others - a situation not conducive to  effective implementation of the excise law and consequently deleterious  to public interest. It is for this very reason  that transfer  or  sub-letting  of  licence  is uniformly prohibited by several State Excise enactments. It, therefore, follows that any agreement whereunder the licence is transferred,  sub-let or  a partnership  is entered  into with  respect  to  the  privilege/business  under  the  said licence,  contrary  to  the  prohibition  contained  in  the relevant excise  enactment, is  an agreement  prohibited  by law. The  object of  such an agreement must be held to be of such  a  nature  that  if  permitted  it  would  defeat  the provisions of  the excise  law within the meaning of Section 23 of  the Contract  Act. Such  an agreement  is declared by Section 23  to be unlawful and void. The question is whether such an  unlawful or  void partnership  can be  treated as a genuine partnership within the meaning of Section 185(1) and whether registration  can be  granted to  such a partnership under the  provisions of  the Income  Tax Act  and the Rules made thereunder.  We think  not. When  the law prohibits the entering into  a particular partnership agreement, there can be in  law no  partnership agreement  of  that  nature.  The

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question  of   such  an   agreement  being  genuine  cannot, therefore, arise. Where, of course, the statutory provisions or the  conditions of  licence do  not prohibit the antering into of  partnership, it  is  obvious,  such  a  partnership cannot be  held to  be illegal, unlawful or void, as held by this Court in Jer and Company. But where there is a specific prohibition as  in  the  case  before  us,  any  partnership entered into would be unlawful and void agreement within the meaning of  Section 23  and no  other law,  whether State or Central, can recognize such an agreement. The fact that such a partnership  can be  permitted by  the Collector  does not detract from  the mandatory  character  of  the  clause.  As pointed  out   above,  Licence   Condition  No.14  expressly provides that  for breach  of any condition of licence or of the Act  or the  Rules made  thereunder, the  licence may be cancelled. The  context -  that it  is an excise enactment - should not be forgotten. The grant of registration under the Income Tax Act, it must be remembered, confers a substantial benefit upon  the partnership firm and its members. There is no reason  who, such a benefit should be extended to persons who have  entered into a partnership agreement prohibited by law. One  arm of  law cannot be utilised to defeat the other arm of  law. Doing  so would be opposed to public policy and bring the law into ridicule. It would be wrong to thing that while acting  under the  Income  Tax  Act,  the  Income  Tax Officer need  not look  to the law governing the partnership which is seeking registration. It would probably have been a different matter  if the  Income Tax  Act  had  specifically provided that  registration can  be granted  notwithstanding that the  partnership is violative of any other law - but it does not say so.      We may clarify that our holding does not mean that such an illegal  partnership cannot  be taxed.  It  is  certainly bound to be taxed either as an unregistered partnership firm or  as   an  association   of  persons.  The  only  question considered herein  is its  right to claim registration under the Income Tax Act.      For the  above reasons,  the appeals  are allowed.  The application(s) under  Section 256(2)  filed by  the assessee are allowed.  The consequent  reference is withdrawn to this Court and  answered in  the affirmative,  i.e., against  the assessee and in favour of the Revenue.      No costs.