Itta/288/2010 Of The Commissioner Of Income Tax v. M/S. Kanaka Durga Wines

THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.T.A.Nos.146 of 2008; 198, 201, 203, 226, 227, 229, 230, 288, 437,454, 468, 474, 481, 483, 485, 492 and 504 of 2010 Dated:30.11.2010 Between: The Commissioner of Income Tax,Vijayawada. … Appellant And M/s.Swarna Wines,D.No.77-31-13,Prakashnagar, Payakapuram,Vijayawada,And others. ... Respondents THE HON’BLE SRI JUSTICE V.V.S.RAOAND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.T.A.Nos.146 of 2008; 198, 201, 203, 226, 227, 229, 230, 288, 437,454, 468, 474, 481, 483, 485, 492 and 504 of 2010 COMMON JUDGMENT:(per Hon’ble Sri Justice V.V.S.Rao) In all these cases the assessees were granted a licence under theAndhra Pradesh Indian Liquor and Foreign Liquor Rules, 1970 and theAndhra Pradesh Excise Act, 1968. The licence enabled the assessee tocarry on trade in retail liquor business. The assessees commenced theirrespective business by forming a partnership firm with others. Such firmswere constituted either before or after obtaining the licence. In the income tax returns, for the relevant year, the assesseesclaimed deduction in respect of the salary and interest paid to thepartners. The assessing officer, following the judgment of the Supreme Court in Biharilal Jaiswal v Commissioner of Income Tax[[1]],disallowed the deduction. The assessees were, however, successfulbefore the Income Tax Appellate Tribunal. The Revenue has now comeforward with these appeals under Section 260A of the Income Tax Act,1961. Except in ITTA No.203 of 2010, though the notices are served onthe respondents, none appears and nobody entered appearance forthem. The question whether the assessee was entitled to claim deductionof salary, and interest paid to the partners, in the returns was consideredby a Division Bench of this Court in The Commissioner of Income Tax v M/s.Swarna Bar & Restaurant[[2]]. There is no dispute that theconclusion therein squarely covers the l i s in these cases. SriY.Subramanyam, Counsel for the respondent in ITTA No.203 of 2010also does not dispute the legal position that the matter is covered by ourjudgment referred to hereinabove. Following the same, these appealsalso have to be allowed. Accordingly the appeals filed by the Revenue are allowed, and the impugned orders of the Income Tax Appellate Tribunal are set aside. Nocosts. _______________ (V.V.S.RAO, J) _______________________________ (RAMESH RANGANATHAN, J) 30.11.2010vs [1](1996) 217 ITR 746 [2]ITTA Nos.613 of 2006 and batch, dated 09.9.2010