Judgment 1. The Income-tax Appellate Tribunal, Patna Bench, B, has submitted a statement of the case under Sec.256(1) of the I.T. Act, 1961 (hereinafter to be referred to as "the Act"). The following questions of law have been submitted for the opinion of this court: "(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal were correct in law in holding that the income derived by the assessee-firm was taxable under the head Business and not under the head Other sources ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal were justified in law in granting registration for the assessment year 1965-66, and continuing the registration for the assessment year 1967-68 ?" 2. The relevant facts as evidenced by the statement of the case are these. The assessee, M/s. Pure Dhansar Coal Co., Dhanbad, had claimed that the assessee was a firm and registration for the same had been claimed under Sec.185 of the Act. According to the assessee, the firm was constituted by an instrument of partnership dated July 1, 1963. The ITO found that on June 7, 1955, the assessee had entered into an agreement with one Shri Basant Kumar Agrawal by which the management of the colliery mine was handed over to him for a period of 10 years. Before that agreement expired, there was a fresh agreement dated September 2, 1963, under which the colliery was given on lease to one Sri Indra Kumar Agrawal, who was appointed as an agent to carry on the colliery and mine business of the assessee, who had executed a general power of attorney in favour of the agent. Under the agreement, the agent had to pay to the assessee-firm a profit at the rate of 8% of the net sale proceeds of the coal despatched subject to a minimum of Rs. 18,000 per year. The agent was to remain in full charge of the sale as well as the dealings during the subsistence of the agreement without any hindrance, interference or objection whatsoever. The ITO was of the view that the assessee was not carrying on any business with effect from the date of commencement of the agreement and the income derived was not an income from "business" but it could be treated as income from "other sources". The ITO was of the view that the assessee was not carrying on any business with effect from the date of commencement of the agreement and the income derived was not an income from "business" but it could be treated as income from "other sources". He further held that as no business was being carried on by the assessee, the firm could not be treated as a partnership firm. According to him, the correct status of the assessee would be that of an association of persons deriving income from their assets. In his view, therefore, as no partnership was in existence in the eye of law, registration could not be granted. According to the ITO, during the period of the agreement, the assets were not treated as commercial assets by the assessee and, therefore, the income could not be assessed under Sec.28 of the Act. He further held that the payment of commission was based on despatches but it was only a measure for calculating the payments to the assessee. The orders of the ITO for the two assessment years in question, namely, 1965-66 and 1967-68, have been marked annexures "A" and "A-1" to the statement of the case. 3. On appeal, the AAC generally agreed with the ITO and upheld the orders of refusal of registration for the assessment years in question. The consolidated order of the AAC has been marked as annexure "B" to the statement of the case. 4. On further appeal to the Tribunal, it was submitted on behalf of the assessee that the business still belonged to the assessee and the assessee had appointed an agent for managing the mines on its behalf. It was submitted that there was a contract for management and there was no agreement to lease out the mine or the machinery. It was further submitted that the agents carried on the business in the name of the assessee and the lease of the mine continued to be in the name of the assessee. Under the agreement, it was stated that after the death of partners, it became very difficult to manage and run the colliery and it was decided to take the help of the agents. The agents had to carry on the business in their capacity as agents and the payments to the assessee were related to the despatches from the coal mines. The agents had to carry on the business in their capacity as agents and the payments to the assessee were related to the despatches from the coal mines. If there were more despatches, the assessee was to get more payment though a minimum had been fixed. The bank account was also opened in the name of Pure Dhansar Coal Co. and it had also been provided in the agreement that on termination of the agreement, the agent was not entitled to any compensation for structures, buildings and other development made by him at his cost during the period of the agreement. It was also brought to the notice of the Tribunal that from June 13, 1967, the business was being continued by the firm itself and the agency agreement had been terminated. With regard to the question of registration, it was claimed that even if the nature of income was held to be income from other sources, registration to the firm should be granted. On behalf of the Revenue, it was contended before the Tribunal that the business was being carried on not by the assessee but by the agents and thus there was no business carried on by the firm. It was further submitted that it was necessary for a firm to carry on the business and in the absence of business, there could not be in existence any legal partnership. The Tribunal, after considering the terms of the deed and on the facts and in the circumstances obtaining in the case, held that the assessee had stopped managing the colliery itself and had given the management to an outsider due to certain difficulties. The Tribunal further held that there was no mention in the lease deed of the mines or of the machinery in the agreement and the mines and machineries continued to be used as commercial assets by the firm. Though wide powers were given to the agent, he continued to be an agent of the assessee who continued to carry on business. The Tribunal also found that the business was being carried on in the same name and the management was to revert to the assessee on termination of the agreement. According to the Tribunal, there was no cessation of business though the actual management had been handed over. Thus, the Tribunal held that the assessee was carrying on the business. The Tribunal also found that the business was being carried on in the same name and the management was to revert to the assessee on termination of the agreement. According to the Tribunal, there was no cessation of business though the actual management had been handed over. Thus, the Tribunal held that the assessee was carrying on the business. It was further held by the Tribunal that even if the income of the firm was assessable under Sec. 56, it would not come in the way of the grant of registration to the firm. The consolidated order of the Tribunal has been marked as annexure "C" to the statement of the case. 5. Mr. B.P. Rajgarhia, learned senior standing counsel for the Revenue, contended that the finding of the Tribunal regarding the relationship of principal and agent was erroneous. He further invited our attention to a Bench decision of this court in the case of Khas Benedih Colliery, Dhanbad CIT V/s. [1974] BBCJ 440. That decision, in our view, however, can hardly be pressed into service on the facts and in the circumstances of the instant case, because at page 442, Untwalia C.J., speaking for the Bench, held that that was not a case where the agent was appointed to carry on the business on behalf of the principal. It was further observed that the use of the words "principal" and "agent" throughout the lease is a misnomer. In so far as the present case is concerned, the finding of the Tribunal is that there was a relationship of principal and agent between the parties and that the assessee was actually carrying on its business through its agent. There is no perversity in the findings recorded by the Tribunal. Learned counsel for the assessee placed reliance on a Bench decision of this court in the case of CIT V/s. Sahana and Sons Ltd. [1976] 102 ITR 437. That Bench, which decided the case to which one of us (S.K. Jha J.) was a party and the Bench presided over by Untwalia C.J., held that the assessee-company which owned a colliery having entered into an agreement with another company under which the latter was to carry on the coal business of the assessee and to pay to it profit at a certain rate on the amount of coal and coke raised and manufactured subject to a guaranteed minimum. The Tribunal held in that case that the relationship was clearly one of principal and agent and the income of the assessee was income from business. It was held by this court that the decision of the Tribunal was correct. The case of Sahana & Sons [1976] 102 ITR 437 (Pat), squarely covers this case and there is no distinguishing feature. 6. We, accordingly, following the decision in Sahanas case [1976] 102 ITR 437 (Put), answer the questions referred to this court in favour of the assessee and against the Revenue and hold, on the facts and in the circumstances of the case, that the Tribunal was correct in law in holding that the income derived by the assessee was taxable under the head "Business" and not under the head "Other sources". We further hold that the Tribunal was justified in granting registration for both the assessment years in question, namely, 1965-66 and 1967-68. In the circumstances, however, we shall make no order as to costs.