This Court In Commissioner Of Income Tax v. Swarna Bar

THE HON’BLE SRI JUSTICE GODA RAGHURAMAND THE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAO ITTA.No. 453 of 2011 ORDER: (Per Goda Raghuram, J) The order dt. 7.2.2007 of the Income Tax Appellate Tribunal,Hyderabad Bench in ITA.No. 1080/Hyd/2006 pertaining to theassessment order, for the assessment year 2001-02 is the subject matterof this appeal by the Revenue under Section 260A of the Income Tax Act,1961 (for short ‘the Act’). The respondent obtained a business license in the name of anindividual partner Sri.S.Yellaiah for retail vending of liquor. In that view ofthe matter, the Assessing Authority held that the assessee firm which hadfiled return in the name of firm did not comply with the 1[st] condition ofSection 184 (1) of the Income Tax Act, 1961 and in view of the provisionsof Section 185 of the Act, the status of the assessee must be treated as anassociation of persons and the claim for interest of Rs. 89,142/- towardspartners capital and Rs. 30,005/- towards remuneration paid to its partnersmust be disallowed. Assessment was made accordingly. The assesseeunsuccessfully appealed to the Commissioner of Income Tax (Appeals),Vijayawada. The Income Tax Appellate Tribunal, Hyderabad howeverallowed the further appeal of the assessee along with similar appealspreferred by others. This Court in Commissioner of Income Tax vs. Swarna Bar Restaurant[[1]]has declared that Section 15 of the A.P. Excise Actprohibits any person from selling or purchasing intoxicating liquor exceptin accordance with the terms and conditions of a license granted in theirfavour; where a license is granted in favour of an individual, only suchindividual is entitled to carry on business in purchase and sale ofintoxicating liquor; and that the firm cannot carry on such business savewith prior permission of the Commissioner of Prohibition and Excise.Therefore where a license is granted in favour of an individual partner, thebusiness cannot be treated as that a firm. In the light of the decision of this Court (supra), the order of thelearned Tribunal cannot be sustained. This appeal is allowed, the orderof the Tribunal dt. 7.2.2007 in ITA.No. 1080/Hyd/2006 is set aside and theorder of the Commissioner (Appeals), confirming the order of assessmentdt. 13.3.2006 passed by the Income Tax Officer, Kothagudem, is restored. The writ petition is allowed as above. There shall be no order as tocosts. ________________________ GODA RAGHURAM, J _______________________________ M.S.RAMACHANDRA RAO, J 25.07.2012.KRB. THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAO ITTA.No. 453 of 2011 ORDER: (Per Goda Raghuram, J) [1](2011) 334 ITR 387 (AP). 25.07.2012.