JUDGMENT [ENTITY], J.
1. The questions, with reference to the assessment year 1987-88, that expect our answer are as follows :
"1. Whether, on the facts and in the circumstances of the case and where a partner obtains a licence and carries on the business of abkari contracts, the Tribunal is right in law in holding (i) it cannot be said that concerned partner has transferred the licence or the privilege to aid in favour of the partnership firm of which he is a partner ? (ii) such transfer, if any, is not prohibited under the [ACT] ?
2. Whether, on the facts and in the circumstances of the case, the assessee is entitled to be treated as a registered firm under the [ACT] ?"
2. The assessee is a partnership firm consisting of fifteen partners engaged in arrack business, During the previous year ending March 31, 1987, relevant to the assessment year 1987-88, the seventh group arrack shops in Kumbala Range, Kasaragod district, were taken in auction for a sum of Rs. 18,17,227 by the partnership firm. However, the licences for the shops were in the names of partners P. Kunhiraman, [ENTITY] and [ENTITY].
3. Clause 11 of the deed of partnership dated January 12, 1987, covering the partnership from August 1, 1986, is as follows :
"The auction taken by any one of the partners in his capacity will be treated as the auction taken by the firm. The death of any partner will not dissolve the firm. The legal heirs of the deceased can be restored to the firm by mutual consent."
4. It would be seen by reference to the said clause that the partners of the firm agreed to treat the auction taken by any one of the partners as the auction taken by the firm. Factually, learned counsel submitted that this was an agreement between the parties contained in the deed of partnership and in regard thereto, it is the firm that is the assessee.
5. After the decision of the Full Bench of this court in [PRECEDENT], this court has consistently followed that the partnership that has been entered into for sharing the privileges in dealing in liquor with other partners is a prohibited one. Such a prohibition is available under [SECTION] of the [ACT] rendering the entire agreement of partnership as void being against public policy and cannot be recognised as a genuine partnership under the [ACT]. We have already seen that the Full Bench relied on the decision of the apex court in [ENTITY] v. CIT [PRECEDENT] wherein the apex court had gone into consideration to hold that the assessee could be refused registration under [SECTION] of the [ACT], and in this connection the apex court made an observation that 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 the health and morals of members of society, close control is envisaged and provided, over the business carried on under the licence. It is observed that this object will be defeated if the licensee is permitted to bring in strangers into the business, which would mean that instead of the licensee 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. The Full Bench has found the very constitution of the partnership firm being violative of the provisions of [SECTION] of the [ACT].
6. Learned counsel brought to our notice yet a subsequent decision of the apex court in [PRECEDENT] to contend that the apex court thought of referring the matter before it to a larger Bench. Learned counsel submitted that this situation be taken into consideration. In B. Posetty and Co.'s case [PRECEDENT], the question related to the entitlement of the sub-partnership to the benefits of registration. In regard to this situation, reference is made to an earlier decision of the apex court in [PRECEDENT], wherein it was held that the members of the sub-partnership did not become partners of the main firm and they constituted different and distinct entities for the purposes of the [ACT]. In fact, the apex court has observed in B. Posetty and Co.'s case [PRECEDENT], that the decision in [PRECEDENT] should squarely cover the question with regard to the entitlement of the sub-partnership to the benefits of registration. But it was found in [ENTITY]'s case [PRECEDENT] to the effect as to whether the income-tax authorities were bound to register a partnership firm which was contrary to the provisions of the State Excise enactment. In the further process of reasoning, the apex court has observed that the decision in [ENTITY]'s case [PRECEDENT] would apply even in the case of such sub-partnership in spite of the situation that the said decision was rendered in connection with the partners of the main abkari business taking in more partners in the main abkari business. It is in this connection, for authoritative pronouncement in relation to the situation of sub-partnership, after making observations, a reference to the larger Bench was made by the apex court.
7. In our judgment, the Full Bench decision of this court wholly binds us. Apart therefrom, the Full Bench drew strength from [ENTITY]'s case [PRECEDENT] of the apex court. In addition, the observations referred to above with reference to B. Posetty and Co.'s case [PRECEDENT] also referred to the position that [ENTITY]'s case [PRECEDENT] would also apply in the case of sub-partnerships. We make it clear that in the proceedings before us, there is no question of sub-partnership in any way.
8. For the above reasons, we answer both the questions in the negative, in favour of the Revenue and against the assessee.
9. A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, as required by law.