It Is Brought To Our Notice By The Learned Standing Counsel Forincome Tax That This Court In Commissioner Of Income Tax,Vijayawada v. In The Light Of The Decision Of This Court In Swarna Bar &Restaurant, This Appeal By The Revenue Requires To Be Allowed And Isaccordingly Allowed. No Costs

THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE B.N.RAO NALLA I.T.T.A. No.139 of 2012 Judgment (Per the Hon’ble Sri Justice Goda Raghuram): Heard Sri J.V.Prasad, learned Standing Counsel for IncomeTax for the appellant. There is no representation on behalf of therespondent-M/s.Keerthi Wines, Khammam. By the order dated 08.08.2012, this Court permitted the learnedcounsel for the appellant to serve notice of the appeal on therespondent by publication in the Khammam District Edition of AndhraJyothi Telugu Daily Newspaper, since notice could not be served onthe respondent by the normal process. Proof of publication of notice in the Khammam Edition ofAndhra Jyothi Telugu Daily Newspaper, dated 18.08.2012 has beenfiled on behalf of the appellant. In the circumstances, this appeal is taken up for disposal. The brief facts are that the respondent-assessee filed its returnof income for the Assessment Year 2002-03 in the status of a firmadmitting a total income of Rs.15,340/- by deducting interest andremuneration paid to the partners. The return was initially processedunder Section 143(1) of the Income Tax Act, 1961 (for short ‘the Act’).Subsequently it was noticed that the licence to deal in liquor wasoriginally issued in the name of an individual and the individualthereafter entered into a partnership agreement with other partners.The return was filed claiming deduction of interest and remunerationpaid to partners. In the circumstances, notice under Section 148 of the Act wasissued and eventually an order of Assessment was passed on06.03.2012 determining the balance tax liability at Rs.67,670/- whileintimating that penalty proceedings under Section 271(1)(c) of the Actwould be issued separately. The assessee preferred an appeal which was allowed by the Commissioner of Income Tax (Appeals),Vijayawada on the basis of an order of the ITAT, VisakhapatnamBench dated 10.07.2006 in I.T.A.No.139/Vizag/2006 holding that in thefacts and circumstances the status of the assessee must bedetermined as a partnership firm and not as an association ofpartners. Aggrieved, the Revenue unsuccessfully preferred appeal tothe ITAT, Hyderabad Bench, which was rejected by the orderimpugned dated 06.02.2007. In the impugned order, the Tribunal relied on the decision of theVisakhapatnam Bench dated 10.07.2006 in I.T.A.No.139/Vizag/2006,the same decision as relied by the Commissioner of Income Tax(Appeals). It is brought to our notice by the learned Standing Counsel forIncome Tax that this Court in Commissioner of Income Tax,Vijayawada v. M/s. Swarna Bar & Restaurant (334 ITR 337) hasruled that since Section 15 of the A.P Excise Act prohibits any personfrom selling or purchasing intoxicating liquor except in accordancewith the terms and conditions of a licence granted in his favour; in acase where a licence is granted in favour of an individual, only hecould carry on the business in the purchase and sale of intoxicatingliquor and no partnership firm can carry on such business save withthe prior permission of the Commissioner of Prohibition and Excise;and that in the circumstances the orders of the Tribunal to the contraryare set aside. In the light of the decision of this Court in Swarna Bar &Restaurant, this appeal by the Revenue requires to be allowed and isaccordingly allowed. No costs. JUSTICE GODA RAGHURAM JUSTICE B.N. RAO NALLA THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE B.N.RAO NALLA va I.T.T.A. No.139 of 2012 (order of the Bench delivered by the Hon’ble Sri Justice Goda Raghuram) Date: 10.10.2012