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TMI Blog2016 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case the Ld. AO erred in law by making the addition to this income of the assessee of the firm Messrs Madhu and Others duly assessed as PF AOP. 3. That on the facts and circumstances of the case the Ld. AO presumed and misled himself by considering the case laws of Apex Court as the entire excise amount is now deposited on the date of auction of the shop.' 4. That on the facts and merits of the case the assessment so framed is bad in law and needs to be modified. 5. That the assessee reserves the right to have additions/ or deletions to the grounds of appeal in order to have justice." 2. Brief facts of the case are that assessee is an individual who was granted license for sale of liquor by District Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on substantive basis as income of Smt. Madhu -individual. For this AO relying on the decision of Hon'ble Supreme Court in CIT vs. Friends and Company 256 ITR 177 and Moti Lal Tak vs. CIT in 234 ITR 472 held that such firm is illegal as the business is licensed issued in the name of individual. Therefore income which has been disclosed in the hands of the firm by the firm is belonging to the assessee herself. CIT (A) while deciding the issue relied up on the decision of Honorable supreme court in case of CIT V Rangila Ram & Other 254 ITR 230 (SC) where in it has been held that firm is not entitled to registration as it some of the partners of the firm hold the license to sell liquor. 3. On this ground no. 1 no arguments were placed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Himachal Pradesh, have been set out, and there is no doubt that a liquor licensee may not enter into a partnership without prior permission. The basic principle, as it seems to us, is that the liquor business is res extra commercium. 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 to 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. Learned counsel for the assessee relied upon a judgment of this court in Addl. CIT v. Degaon Ganga Reddy G. Ramakrishna and Co. [1995] 214 ITR 650; [1995] Suppl. 2 SCC 146. It dealt with the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd order under appeal is set aside and the question is answered in the negative and in favour of the Revenue." In view of above decision of Honourable Supreme court we confirm the action of AO in taxing the income of "M/s Madhu & Other" partnership firm as income of the assessee Mrs. Madhu - Individual. Therefore ground no 1 of the appeal is dismissed. 5. The second, third and fourth grounds are relating to additions made in the hands of 'M/s Madhu & Ors' which is a partnership firm vide order dated 20th March 2006 as under :- a. Ground NO 2 - Rs. 1,92,000/- were disallowed on account of salary paid to partners because assessment is made in the status of AOP on protective basis b. Ground No 3. an addition of Rs. 16,99,558/- u/s 40A(3) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, Mrs Madhu, to contest the additions made in the hands of M/s Madhu & Ors which was made u/s 68 and u/s 40A(3). It was further submitted that even the disallowance of salary to partners of the firm paid by M/s Madhu & Ors was also not discussed. Therefore he stated that an opportunity was not granted by AO to explain these issues of addition u/s 68 as well as disallowance u/s 40A (3) of the Act. Therefore the matter may be set aside to the file of AO. 9. Ld. DR relied on the order of CIT(A) stating that CIT(A) has considered all the aspects and therefore the appeal of the assessee may be dismissed. 10. We have carefully considered the rival submission. On the basis of additions made in the M/s Madhu & Others on protective basis Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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