Sc) – Commissioner Of Income Tax v. Rangeelaram And Others? Rangeelaram And Others?

IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 13 DAY OF OCTOBER, 2014 PRESENT THE HON’BLE Mr. JUSTICE N. KUMAR AND THE HON’BLE Mr. JUSTICE B. MANOHAR I.T.A. No. 45/2008 BETWEEN : -------------- 1. THE COMMISSIONER OF INCOME TAX KHIMJIBHOI COMMERCIAL COMPLEX, OPP. CIVIL HOSPITAL BELGAUM – 590 001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2 BELGAUM. BELGAUM. … APPELLANTS (BY Sri. K.V. ARAVIND, ADV.) AND : ------- M/S. LAKSHMI LIQUOR WHOLESALE AGENCY VIDYANAGAR GOKAK DIST. BELGAUM. … RESPONDENT (Sd.) --- THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T. ACT ARISING OUT OF ORDER DATED 23.08.2007 PASSED IN I.T.A. No. 119/PNJ/2007 FOR THE ASSESSMET YEAR 2002-03 WITH A PRAYER TO ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE AND ETC. THIS I.T.A. COMING ON FOR ADMISSION THIS DAY, N. KUMAR, J, DELIVERED THE FOLLOWING; J U D G M E N T The revenue has preferred this appeal against the order passed by the Income Tax Tribunal following the order passed by the Tribunal earlier and dismissing the appeal filed by the revenue. 2. The substantial questions of law which are raised in this appeal are as under: 17.Whether the First Appellate Authority and Tribunal was correct in holding that a licence to vend liquor issued to an individual can be used by the firm and/or its partners when there being no legal transfer of the lience? 18.Whether the First Appellate Authority and Tribunal was correct in holding that though licence was issued to an individual to vend in liquor, it utilized by a third party firm, the same would not attract Section 23 of the Contract Act? Contract Act? 19.Whether the First Appellate Authority and Tribunal was correct in distinguishing the judgment of the Hon’ble Supreme Court reported in 2002 (254) ITR Hon’ble Supreme Court reported in 2002 (254) ITR 230 (SC) – Commissioner of Income Tax Vs. Rangeelaram and others? Rangeelaram and others? 20.Whether the First Appellate Authority and Tribunal was justified in holding that the firm is a valid firm despite the fact that it has violated the provisions of despite the fact that it has violated the provisions of Karnataka Excise Act in conducting liquor business without payment of transfer fee and without having licence of its own and thus such act of the firm being opposed to the public policy? 21.Whether the licence issued to an individual for vending liquor can be transferred as an asset of the firm under Section 2(2) of the Partnership Act and if so, would it not amount to violation of the licence conditions, thus affecting the provisions of Section 23 of the Indian Contract Act? 3. The said substantial questions of law did arise for consideration before this Court in the case of assessee itself in I.T.A. No. 586/2009 which case was decided on 29.10.2009. This Court following the judgment of the Apex Court in the case of Commissioner of Income Tax Vs. Rangila Ram and others reported in (2002) 254 ITR 230 SC wherein it was held that no one may deal in liquor without express permission. It is only the licensee who is granted such permission. If he enters into a partnership deal in liquor, all the other partners would, as partners, also be dealing in liquor and holding the same. This would be contrary to the basic principle and illegal. Therefore the substantial questions of law were answered in favour of the revenue and against the assessee. The said order has attained finality. Therefore this appeal requires to be allowed answering the substantial questions of law in favour of the revenue and against the assessee. Hence, we pass the following; O R D E R I.Appeal is allowed. II.The impugned order passed by both the Appellate Authorities are set aside. III.The order of the Assessing Authority is restored. Sd/- JUDGE LRS. Sd/- JUDGE