K. Veeraswami, J.
1. The two references pertain to the assessment years 1960-61 and 1962-63. The Tribunal has found that the assessee-firm plied three lorries during the first year and two lorries during the second which they owned but with their permits not transferred to them but continuing to stand in the names of the original owners. Upon those facts, the Tribunal was of opinion, agreeing with the Commissioner of Income-tax, that inasmuch as the firm operated the lorries without valid permits which was prohibited by Section 42 of the Motor Vehicles Act, the firm engaged itself in an unlawful activity, namely, the running of the lorries without a valid permit. On that view the registration of the firm which was granted by the Income-tax Officer and subsequently renewed by him stood cancelled. The common question in this reference is:
Whether on the facts and in the circumstances of the case, the refusal of renewal of registration under Section 26-A of the Income-tax Act, 1922 to the assessee-firm for the assessment years, 1960-61 and 1962-63 is justified in law
2. Our attention has been invited to an unreported judgment of the Supreme Court in Civil Appeal No. 1453 of 1966 and it is contended that in view of it, the Tribunal's order can no longer be sustained. In that case, which went up to the Supreme Court, the view taken by this High Court in Viswanathan v. Shanmugham I.L.R. (1966) 2 Mad. 477 : (1966) I M.L.J. 363 was that a benamidar of certain motor vehicles, representing himself to be the owner, falsely obtained the permits in his name, and allowed the true owner, who had no permit, to conduct the actual business and this was a flagrant violation of the basic requirements of the Motor Vehicles Act and of its scheme. The Supreme Court did not accept that view and considered that Varadarajulu Naidu v. Thavasi Nadar (1963) 2 M.L.J. 20 was wrongly decided. The decision of the Andhra High Court in Chavali Venkataswami v. Chavali Kotayya (1959) Andh 725 : (1959) 2 A.W.R. 407 which had taken a view similar to the one in Viswanathan v. Shanmugham I.L.R. (1966) 2 Mad. 477 : (1966) 1 M.L.J. 363 was also dissented from. The Supreme Court in doing so observed ::
The learned Counsel for the respondent says that any rate the Act does not contemplate persons applying for permits benami. In India benami transactions are recognised and not frowned upon. (See Our Narayan v. Sheolal Singh In Commissioner of Income-tax, Gujarat v. Abdul' Rahim & Co. : 55ITR651(SC) it was held by this Court that the registration of the partnership deed under Section 26-A of the Indian Income-tax Act, 1922, cannot be refused on the ground that K was the benamidar for V.
We see nothing in the Act which expressly or by implication bars benami transactions or persons owning buses benami and applying for permits on that basis.
3. The principle of the judgment of the Supreme Court just referred to would clearly be applicable to the instant references. Though the firm was the owner of the lorries and operating them, the partnership cannot be regarded as illegal merely because the permits in regard to them stood in the name of their original owners. That conclusion is inescapable in view of the decision of the Supreme Court in the Civil Appeal.
4. The question in the two references are answered in favour of the assessees with costs. Counsel's fee Rs. 250 one set.