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Issues involved: Interpretation of whether a lease granted for vending liquor in favor of a partner can be used by the firm.
The High Court of Karnataka heard an appeal by the Revenue against the order of the Income Tax Appellate Tribunal, Panaji Bench, which dismissed the appeal filed by the Revenue. The appeal was admitted to consider the substantial question of law regarding the use of a liquor vending license by a partnership firm involving the person to whom the license is granted as a partner. The appellant's counsel argued that the issue at hand has been settled by a Supreme Court decision in the case of Commissioner of Income Tax Vs. Rangila Ram & Others (2002) 254 ITR 230 SC. The Supreme Court held that if a licensee enters into a partnership to deal in liquor, all partners would be considered as dealing in liquor, which goes against the basic principle and is illegal. Relying on this decision, the substantial question of law was answered in favor of the Revenue in the present appeal, leading to the setting aside of the Tribunal's order confirming the Commissioner of Income Tax (Appeals) decision. Furthermore, the respondent's counsel submitted a memo stating the readiness to deposit the refunded tax within four weeks and requested permission to raise other grounds before the Commissioner of Income Tax (Appeals). The Court allowed the respondent to deposit the tax within the specified time and contend other grounds besides the substantial question of law, related to allowances available to the assessee. Failure to deposit the tax within the granted time would result in the respondent forfeiting the right to raise any contentions in the appeal.
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