DCIT, Circle 1(2), Pune V. M/s. Rajyog Developers, Pune

ITA 1639/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85295 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1639/PN/2013 (ASSESSMENT YEAR : 2007-08) DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), PUNE. . APPELLANT VS. M/S RAJYOG DEVELOPERS, OFFICE NO.101, FORTUNE ESTATE, PUNE SOLAPUR ROAD, HADAPSAR, PUNE 411 028. PAN : AAIFR3158E . RESPONDENT DEPARTMENT BY : SHRI RAJESH DAMOR ASSESSEE BY : SMT. DEEPA KHARE DATE OF HEARING : 10-12-2014 DATE OF PRONOUNCEMENT : 10-12-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DA TED 05.06.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.08.2012 PASSED BY THE ASSESSING OFFICER U/S 154 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE REVENU E IS AGAINST THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSEE WAS ENTITLE D TO DEDUCTION OF RS.22,96,424/- TOWARDS PARTNERS REMUNERATION AND I NTEREST ON CAPITAL. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF PROMOTERS AND BUILDERS. FOR ASSESSMENT YEAR 2007-08, IT FILED A RETURN OF INCOME ORIGINALLY ON 06.11.2007 DECLARING TOTAL INCOME OF RS.16,03,387/- WHICH WAS SUBSEQUENTLY REV ISED TO RS.72,53,387/- BY WAY OF A REVISED RETURN FILED ON 11.04.2008. AN ASSESSMENT U/S 143(3) OF THE ACT DATED 20.11.2009 WAS FINALIZED WHEREIN THE TOTAL INCOME WAS ASSESSED AT RS.72,53,390/- WHICH, INTER-ALIA, INCLU DED A CLAIM OF DEDUCTION U/S 40(B) OF THE ACT RELATING TO REMUNERATION AND INTER EST ON CAPITAL PAID TO THE ITA NO.1639/PN/2013 PARTNERS. SUBSEQUENTLY, THE ASSESSING OFFICER INVO KED SECTION 154 OF THE ACT AND PASSED AN ORDER DATED 28.08.2012 ON THE GROUND THAT A MISTAKE APPARENT FROM RECORD HAS CREPT INTO THE ASSESSMENT ORDER DAT ED 20.11.2009 INASMUCH REMUNERATION AND INTEREST ON CAPITAL PAID TO THE PA RTNERS WAS WRONGLY ALLOWED. AS PER THE ASSESSING OFFICER, THE AMOUNT OF REMUNER ATION AND INTEREST ON CAPITAL PAID TO THE PARTNERS AMOUNTING TO RS.11,56, 424/- AND RS.11,40,000/- RESPECTIVELY WERE NOT ALLOWABLE BECAUSE THE SAME WE RE NOT DEBITED IN THE PROFIT & LOSS ACCOUNT, BUT THE SAME WERE DEBITED ME RELY IN THE PROFIT & LOSS APPROPRIATION ACCOUNT. THE AFORESAID ACTION OF THE ASSESSING OFFICER WAS CARRIED IN APPEAL BEFORE THE CIT(A), WHO HAS SINCE ALLOWED THE CLAIM OF THE ASSESSEE, AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE H AS REITERATED THE STAND OF THE ASSESSING OFFICER CONTAINED IN THE ORD ER PASSED U/S 154 OF THE ACT DATED 28.08.2012 TO THE EFFECT THAT THE DEDUCTION O F REMUNERATION AND INTEREST ON CAPITAL PAID TO THE PARTNERS IS NOT ALLOWABLE AN D IT WAS NOT DEBITED TO THE PROFIT & LOSS ACCOUNT. 5. ON THE OTHER HAND, THE LD. REPRESENTATIVE FOR TH E RESPONDENT-ASSESSEE POINTED OUT THAT THE CIT(A) HAS CORRECTLY ALLOWED T HE DEDUCTION BECAUSE THE AMOUNTS CLAIMED AS DEDUCTION WERE IN ACCORDANCE WIT H THE PARTNERSHIP DEED AND THE SAME WERE DEBITED TO THE PROFIT & LOSS APPR OPRIATION ACCOUNT AND CARRIED TO THE BALANCE-SHEET ACCORDINGLY. IT WAS A LSO POINTED OUT THAT THE AFORESAID AMOUNTS WERE DULY REFLECTED IN THE CAPITA L ACCOUNT OF THE PARTNERS APPEARING IN THE BALANCE-SHEET. 6. WE HAVE CAREFULLY CONSIDERED THE RIVALS SUBMISSI ONS. UNDISPUTEDLY, THE AMOUNTS CLAIMED BY THE ASSESSEE AS DEDUCTION ON ACC OUNT OF REMUNERATION AND INTEREST ON CAPITAL PAID TO THE PARTNERS ARE AU THORIZED AND IN ACCORDANCE WITH THE TERMS OF THE PARTNERSHIP DEED. IT IS ALSO NOT IN DISPUTE THAT THE AMOUNTS ARE WITHIN THE PERMISSIBLE LIMITS PRESCRIBE D IN SECTION 40(B) OF THE ACT. ITA NO.1639/PN/2013 THE ONLY OBJECTION OF THE ASSESSING OFFICER IS THAT SUCH AMOUNTS HAVE NOT BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT. IN THIS CONTEXT, SECTION 40(B) OF THE ACT, WHICH PERMITS DEDUCTION ON ACCOUNT OF REMUNERA TION AND INTEREST ON CAPITAL PAID TO THE PARTNERS, DOES NOT CONTAIN ANY PRESCRIPTION THAT THE AMOUNT ALLOWABLE U/S 40(B) OF THE ACT IS TO BE DEBITED IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. APART THEREFROM, THE CIT(A) HAS NOTE D THAT THOUGH THE AMOUNT HAS NOT BEEN DEBITED IN THE PROFIT & LOSS ACCOUNT B UT THE SAME HAS BEEN DEBITED TO THE PROFIT & LOSS APPROPRIATION ACCOUNT AND CARRIED TO THE BALANCE- SHEET AND REFLECTED AS A CREDIT IN THE CAPITAL ACCO UNT OF THE PARTNERS. IN OUR CONSIDERED OPINION, IN THE BACKGROUND OF THE AFORES AID, WE FIND NO ERROR ON THE PART OF THE CIT(A) IN SETTING-ASIDE THE OBJECTION O F THE ASSESSING OFFICER AND ALLOWING ASSESSEES CLAIM FOR DEDUCTION OF AMOUNT P AID TOWARDS PARTNERS REMUNERATION AND INTEREST ON CAPITAL. THE ORDER OF THE CIT(A) IS HEREBY AFFIRMED AND ACCORDINGLY REVENUE FAILS IN ITS APPEA L. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING O N 10 TH DECEMBER, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 10 TH DECEMBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE