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2016 (3) TMI 531 - ITAT DELHI

2016 (3) TMI 531 - ITAT DELHI - TMI - Addition to income of the assessee of the firm Messrs Madhu and Others duly assessed as PF AOP - Held that:- In view of decision of Honourable Supreme court in Rangila Ram And Others [2000 (8) TMI 11 - 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.

Additions made in the hands of ‘M/s Madhu & Ors’ which is a partnership firm - addition made .....

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e same is that both the orders u/s 143(3) read with section 148 in the hands of the assessee as well as M/s Madhu & Others are passed on 20th March, 2006 and therefore we set aside ground no. 2 and 3 of the appeal of the assessee contesting the addition u/s 68 as well as u/s 40A(3) of the Act back to the file that assessing officer with direction to deal with both the issues on merit after giving proper opportunity of hearing to the assessee.

Disallowance of the salary to the partners .....

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nt : Shri V K Goel, Adv For the Respondent : Shri P Dam Kanunjna, Sr. DR ORDER Per Prashant Maharishi, AM ITA No 873/Del/2015 1. This appeal has been filed by the assessee against the order of CIT(A)- Meerut, dated 30th January, 2015 raising following grounds of appeal : "1. That on the facts and circumstances of the case the ITO Ward 1(4) Meerut erred in law by making an addition of ₹ 27,92,190/- on substantive basis to the income of the assessee. 2. That on the facts and circumstanc .....

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serves 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 officer. However in AY 2002-03 , the year in which she was granted license, it was submitted that business of sale of liquor is carried on in the name of the Firm in name and style as "M/s Madhu & Others" which is constituted by the deed of partnership dat .....

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l basis and in the hands of the firm on protective basis. On appeal by the before CIT (A), he upheld that the income s to be taxed in the hands of the individual on substantive basis. On appeal before CIT (A) by the appellant Individual assessee, he upheld taxing of the income in the hands of the individual assessee. The partnership firm M/s Madhu & Others did not files any appeal against the order of the CIT (A) before higher forums. Therefore assessee has accepted that the income of the fi .....

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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 .....

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a licensee could not be "permitted to bring in strangers into the business, which would mean that instead of the licensee carrying on the business, it would be carried on by others-a situation not conducive to effective implementation of the excise law and consequently deleterious to public interest. For this very reason the transfer or subletting of the licence is uniformly prohibited by several State excise enactments. It, therefore, follows that any agreement where under the license is .....

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icable, even in the 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 hol .....

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ships formed by individual partners of the main partnership which were lessees, with some others, merely to finance the business of a partner of the main firm doing abkari business and share the profits and losses accrued to or received by him from the main firm, were not in violation of section 14 of the Abkari Act. For this reason, there is no basis to hold that the sub-partnerships were in violation of section 14 of the Abkari Act and, therefore, illegal. The Tribunal was right in holding tha .....

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ri business and share the profits and losses accrued to or received by him therefrom. It was in these circumstances that it was held that such subpartnerships were not disentitled to registration under the Income-tax Act. In the result, the appeal is allowed. The judgment and 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 &quo .....

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. an addition of ₹ 16,99,558/- u/s 40A(3) for a payments of ₹ 84,97,791/- is made in violation of section 40A(3) and therefore a disallowance @ 20% thereof amounting to ₹ 16,99,558/- is made c. Ground No 4 - unexplained deposit taxed u/s 68 of the Act with respect to six persons amounting to ₹ 8,50,000/-. 6. Over and above sum of ₹ 50,633/- was the returned income in the hands of Messrs Madhu and Ors was also added in the hands of the assessee. 7. Messrs Madhu & .....

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se of M/S Madhu & Others has held that additions made in the hands of Messrs Madhu & Ors which are now clubbed in the hands of appellant assessee (individual) would be dealt with in the appeal of appellant assessee Individual. On appeal before CIT(A) all the arguments of the assessee were rejected on the basis of finding of assessing officer in case of assessment order of Messrs Madhu & Ors. and therefore assessee is in appeal before us. 8. Ld. AR submitted before us that at the time .....

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