M/s. Om Prakash and Others, Dehradun V. ITO, Dehradun

ITA 444/DEL/2014

• Counselvise Citation: 44420114 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT ITA NO: 444/DEL/2014 AY : - 2009-10 M/S. OM PRAKASH AND OTHERS VS. ITO G-19, RACE COURSE WARD -2 (3) DEHRADUN DEHRADUN (PAN AABF05152E) (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI K.K. JAISWAL, SR. DR DATE OF HEARING : 11.6.2015 DATE OF PRONOUNCEMENT :16.7. 2015 O R D E R THIS APPEAL BY THE ASSESSEE FOR THE ASSESS MENT YEAR 2009-10 IS DIRECTED AGAINST THE ORDER OF THE CIT(A). AT THE TIME OF HEA RING NONE APPEARED ON BEHALF OF THE ASSESSEE AND ACCORDINGLY THE APPEAL OF THE AS SESSEE IS BEING DECIDED EX PARTE QUA THE ASSESSEE/APPELLANT ON MERITS AFTER HEARING THE LD. DR. 2. THE GROUNDS OF THE APPEAL OF THE ASSESEE A RE REPRODUCED HEREUNDER :- 1. THAT THE APPELLATE ORDER DATED 9.12.2013 IS RECEIV ED BY THE ASSESSEE/APPELLANT ON 4.1.2014, HENCE THE APPEAL IS WITHIN LIMITATION. 2. THAT THE ASSESSMENT ORDER AS WELL AS THE APPELLATE ORDER DATED 9.12.2013 IS PASSED WITHOUT CONSIDERING THE FACTS AND LAW RELEVA NT TO THE MATTER AND THE ADDITIONS MADE ARE NOT MAINTAINABLE. 3. THAT THE ASSESSEE/APPELLANT IS A PARTNERSHIP FIRM A ND SHOULD BE ASSESSED AS A PARTNERSHIP FIRM. THE APPELLANT FIRM HAS FILED THE CERTIFIED COPY OF PARTNERSHIP DEED AT THE TIME OF ASSESSMENT AS WELL AS AT THE HE ARING OF APPEAL. AS THE PARTNERSHIP IS EVIDENCED BY AN INSTRUMENT AND THE I NDIVIDUAL SHARES OF THE ITA NO. 444/DEL/2014 OM PRAKASH AN D OTHERS VS. ITO 2 PARTNERS ARE SPECIFIED IN THE INSTRUMENT I.E. IN TH E PARTNERSHIP DEED, THAT REQUIREMENT OF SECTION 184 ARE FULFILLED. LEARNED ASSESSING OFFICER AS WELL AS THE CIT(A) HAS ERRED IN TREATING THE ASSESSEE AS AN A.O.P. FURTHER BECAUSE (I) THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RANGILA RAM AND ORS (2002) 254 ITR 230(SC) IS NOT APPLICABL E TO THE CASE OF THE APPELLANT AS THE FACTS OF BOTH CASES ARE DIF FERENT AND THE CASE OF RANGILA RAM AND ORS (SUPRA) RELATES TO THE ASSESSMENT OF THE FIRMS PRIOR TO 1.4.1992, WHEN THE PROVISIONS OF OLD SECTION 184 OF THE I.T. ACT 1961 WERE APPLICABLE BUT AFTER SUBS TITUTION OF NEW SECTION 184, THE JUDGMENT IS NOT RELEVANT, (II) THE LICENCE HOLDER (PARTNER) HAS NOT BROUGHT THE LI QUOR LICENSE AND THE PRIVILEGES THERE UNDER BY WAY OF HIS CAPITA L CONTRIBUTION TO THE PARTNERSHIP ASSETS AND MERELY FORMING OF PARTNE RSHIP FIRM WOULD NOT TANTAMOUNT TO A TRANSFER OF LICENSE. (III) WHOLE SCHEME OF TAXATION OF PARTNERSHIP FIRMS HAS C HANGED W.E.F. 1.4.1992 AFTER SUBSTITUTION OF A NEW SECTION 184 IN PLACE OF THE OLDER ONE, AND (IV) THE I.T. ACT 1961 IS A SPECIAL ACT AND THE PROVISIO NS OF ANY OTHER STATUTE CANNOT BE DRAGGED IN, TO TAX THE ASSESSEE I GNORING THE SPECIFIC PROVISIONS OF THE I.T. ACT 1961. THE DECISION OF LEARNED ASSESSING OFFICER AN D AS CONFIRMED BY THE LEARNED CIT(APPEALS), DEHRADUN, TO TAX THE A PPELLANT AS AN AOP IS ERRONEOUS AND IS NOT MAINTAINABLE. ADDITION OF RS. 781239/- THE AMOUNT OF REMUNERATION (RS. 352239/-) AND INTT (RS. 429000-) PAID TO PARTNERS MAY KINDLY BE DELETED. 4. THAT THE ADDITION OF RS. 66950/- ON ACCOUNT OF CASH PAYMENT BE DELETED AS IT IS COVERED UNDER THE EXCEPTIONS PROVIDED UNDER RULE 6DD. 3. THE LD. DR SUBMITTED THAT THE ASSESSEE WA S IN THE BUSINESS OF TRADING OF LIQUOR AND THE LICENCE FOR TRADING LIQUOR WAS IN TH E NAME OF TWO PERSONS, WHEREAS THERE WERE 17 PARTNERS AS PER THE INSTRUMENT OF PAR TNERSHIP DEED IN TRADING OF LIQUOR IN THE NAME AND STYLE OF M/S. OM PRAKASH & OTHERS. HE SUBMITTED THAT THE ENTIRE PAYMENT OF LICENCE FEE, MINIMUM MONTHLY GUARANTEED DUTY AND INTEREST THEREON WERE MADE BY THESE TWO PARTNERS NAMELY SHRI RAM KUM AR JAISWAL AND SHRI SHIV PRASAD JAISWAL AS PER CERTIFICATES GRANTED BY THE DISTT. EXCISE OFFICER , DEHRADUN. HE SUBMITTED THAT THE AO HAS RECORDED IN THE ASSESSMEN T ORDER THAT THE PERSONS TO ITA NO. 444/DEL/2014 OM PRAKASH AN D OTHERS VS. ITO 3 WHOM LICENCES WERE GIVEN TO DEAL IN LIQUOR BUSINESS UNAUTHORISEDLY ALLOW 15 OTHER PERSONS TO DEAL LIQUOR BUSINESS AND THEREFORE THER E WAS A VIOLATION OF THE PROVISION OF THE INCOME TAX ACT 1961 AND AO WAS JUSTIFIED IN ASSESSING THE ASSESEE THAT CONSISTING OF 17 PERSONS AS AOP AND DISALLOWING SAL ARY AND INTEREST CLAIMED TO HAVE BEEN PAID TO THE PARTNERS. HE REFERRED TO THE RELEV ANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. DR AND HAVE PERUSED THE ORDER OF THE AO AND CIT(A). I FIND THAT THERE IS NO PROVISION OF LAW WHICH PROHIBITS LIQUOR BUSINESS TO BE CONDUCTED IN THE PARTNERSHIP WITH OTHERS BY THE PERSONS TO WHOM THE LICENCE TO DEAL IN LIQUOR BUSINESS WAS GR ANTED UNDER THE EXCISE ACT. THE PARTNERSHIP FIRM OF THE ASSESSEE CONSISTING OF 17 P ERSONS IS EVIDENCED BY INSTRUMENT OF PARTNERSHIP DEED DULY CONSTITUTED BETWEEN THE 17 PARTNERS AND REVENUE COULD NOT SHOW ANY VIOLATION OF THE PROVISION THE INDIA N PARTNERSHIP ACT IN THIS REGARD. THE AO HAS MENTIONED IN PARA 3.1 OF THE ASSESSMENT ORDER THAT THE ASSESEE HAS ARGUED THAT THE PROVISION OF UTTRAKHAND EXCISE ACT PERMITS THE LICENCE HOLDERS TO RUN THE BUSINESS WITH OTHER PERSONS IN THEIR CAPACI TY AS PARTNERSHIP FIRM. THUS THERE IS NO VIOLATION OF THE PROVISION OF SECTION OF UTTR AKHAND EXCISE ACT. IN THIS CASE THE INSTRUMENT OF PARTNERSHIP DULY SIGNED AND EXECUTED WAS FILED BY THE ASSESEE BEFORE THE AO AND THE REVENUE COULD NOT SHOW ANY VIOLATION OF STATUTORY PROVISION IN THIS REGARD. NO OTHER REASON HAS BEEN ADVANCED BY THE A O TO ASSESS THE ASSESSEE IN THE STATUS OF AOP AND NOT FIRM AS CLAIMED BY THE AS SESSEE. THE INDIVIDUAL SHARES OF THE PARTNERS WERE SPECIFIED IN THE INSTRUMENT OF PA RTNERSHIP DEED. THE ASSESSEE HAS CLAIMED THAT THE DECISION OF HONBLE SUPREME COURT IN RANGILA RAM & OTHERS CITED BY THE REVENUE AUTHORITIES WAS NOT APPLICABLE TO TH E CASE OF THE ASSESEE AS IT RELATES ITA NO. 444/DEL/2014 OM PRAKASH AN D OTHERS VS. ITO 4 TO THE ASSESSMENT OF FIRM PRIOR TO 1.4.1992 WHEN TH E PROVISIONS OF THE RELEVANT SECTION 184 OF THE I.T. ACT WERE SUBSTANTIATED BY A NEW SECTION 184 AND THE ENTIRE LAW OF ASSESSMENT OF THE FIRM WAS CHANGED BY THE LE GISTRATURE. IN THESE FACTS OF THE CASE I AM OF THE VIEW THAT AS THE PARTNERSHIP FIRM OF THE ASSESSEE WAS EVIDENCED WITH THE INSTRUMENT OF PARTNERSHIP DEED WHEREIN T HE INDIVIDUAL SHARES OF THE PARTNERS WERE SPECIFIED AND THE SAME WAS FILED WITH THE REVENUE AUTHORITIES, THE SAME WAS ENTITLED TO BE ASSESSED IN THE STATUS OF F IRM AND ACCORDINGLY THE SALARY AND INTEREST PAID TO THE PARTNERS TOTALLING TO RS. 7,81 ,239/- WAS ALLOWABLE TO THE ASSESEE AND THE ADDITION MADE OF THIS AMOUNT IS DELETED AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY TO THIS EXTENT ALLOWED . 5. GROUND NO. 4 OF THE ASSESSEE IS REGARDING PA YMENT OF RS. 66,950/- I FIND THAT THE ASSESSEE COULD NOT SHOW THAT IT WAS REQUIRED TO MAKE SUCH PAYMENT ON A HOLIDAY . THE ONUS WAS ON THE ASSESSEE TO PROVE THA T IT IS COVERED UNDER THE EXCEPTIONS PROVIDED UNDER RULE 6DD OF THE I.T. RULE S 1961. NO SUCH EVIDENCE COULD BE ADDUCED BY THE ASSESEE AND ACCORDINGLY THE GROUN D OF APPEAL NO. 4 OF THE ASSESSEE IS DISMISSED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.7 .2015. SD/- (G.C. GUPTA) VICE PRES IDENT DATED: THE 16.7.2015 *VEENA ITA NO. 444/DEL/2014 OM PRAKASH AN D OTHERS VS. ITO 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 11.6.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 11.6.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER