ACIT, Hyderabad V. M/s Chabbra Associates, Secunderabad

ITA 1162/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3104 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: A V RAGHURAM
• Section: 44AD; 43D; 145; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMEBR ITA NO.1162/HYD/2009 ASSTT. YEAR 2006-07 ACIT, CIRCLE-10 (1) HYDERABAD V/S. M/S CHABBRA ASSOCIATES, SECUNDERABAD (PAN NO.AABFC 4267 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N. CHARYA, DR RESPONDENT BY : SHRI A.V. RAGHU RAM O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 200 6-07 IS DIRECTED AGAINST THE ORDER OF THE CIT (A). THE GROUND S OF THE APPEAL OF THE ASSESSEE ARE AS UNDER: '1. THE CIT (APPEAL) ORDER IS ERRONEOUS BOTH ON FAC TS AND ON LAW. 2. THE CIT (APPEAL) HAS FAILED TO APPRECIATE THE FACT THAT INCOME OF THE ASSESSEE IS NOT COMPUTED AS PER THE PROVISIONS OF SECTION 44AD (1) TO ALLOW REMUNERATIO N AND INTEREST AS PER PROVISO TO SUB-SECTION 2 OF SECTION 44AD. ITA NO.1162/HYD/2009 M/S CHABBRA ASSOCIATES, SECUNDERABAD. 2 3. AS PER JURISDICTIONAL HIGH COURT'S DECISION IN THE CASE OF M/S INDWELL CONSTRUCTION VS. COMMISSIONER OF INCOME TAX (232 ITR 776), WHEN BOOKS OF ACCOUNTS ARE REJECTED AND INCOME IS ESTIMATED U/S 145 ALL THE DEDUCTION, ALLO WANCES AND DISALLOWANCES CONTAINED IN SECTION 30 TO 43D AR E DEEMED TO HAVE TAKEN INTO ACCOUNT WHILE ESTIMATING THE INCOME, SO NO FURTHER DEDUCTION ON REMUNERATION AND INTEREST IS ALLOWABLE. THE CIT (APPEAL) FAILED TO F OLLOW THE DECISION OF JURISDICTIONAL HIGH COURT'S ORDER'. 2. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ISSUE IN THE GROUNDS OF THE APPEAL O F THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD TRIBUNAL IN M/S K.SATYANARAYANA RAO & CO. VS. CIT, I TA NO.618/HYD/2009 DATED 29-07-2009. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE OF ALLOWABILITY OF SALARY AND INTEREST PAID TO THE PA RTNER SUBJECT TO THE LIMITS PROVIDED IN SEC.40(B) OF THE ACT IN THE CASE WH ERE PROFIT OF THE ASSESSEE ARE ESTIMATED, IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN M/S K . SATYANARAYANA RAO & CO. (SUPRA). WE BEING IN AGREEM ENT WITH THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL CITED (SUPRA) HOLD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION IN RESPECT OF SALARY AND INTEREST PAID TO THE PARTNERS SUBJECT TO THE LIMITS OF THE PROVI SION IN SEC.40(B) ITA NO.1162/HYD/2009 M/S CHABBRA ASSOCIATES, SECUNDERABAD. 3 OF THE ACT AND ACCORDINGLY THE ORDER OF THE CIT (A) O N THIS ISSUE IS CONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE AR E DISMISSED. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 09-07-2010. SD/- SD/- (AKBER BASHA) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE:9TH JULY, 2010 COPY FORWARDED TO: 1. THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-10(1) RO OM NO.515, A.C. GUARDS, IT TOWERS, HYDERABAD 500004 2. M/S. CHABBRA ASSOCIATES, H.NO.11-1-778/14, CHILKALAGUD A, SECUNDERABAD 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, HYDERABA D. 4. THE COMMISSIONER OF INCOME-TAX-V, HYDERABAD 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.