Assistant Commissioner of Income-tax, (Central) Circle , Kolhapur V. M/s. Mahabharat Constrution Corporation, Kolhapur

ITA 1944/PUN/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0724 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY M VHANBATTE
• Keywords: Tax effect

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1944/PUN/2017 / ASSESSMENT YEAR : 2010-11 ACIT, CENTRAL CIRCLE, KOLHAPUR . /APPELLANT VS. M/S. MAHABHARAT CONSTRUCTION CORPORATION, 694, B-WARD, AZAD CHOWK, KOLHAPUR PAN : AACFM1687R . / RESPONDENT / APPELLANT BY : SHRI RAJESH GAWALI / RESPONDENT BY : SHRI SANJAY M. VHANBATTE / DATE OF HEARING : 03.10.2018 / DATE OF PRONOUNCEMENT:03.10.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A)-2, KOLHAPUR DATED 15-06-2017 FOR THE ASSESSMENT YEAR 2010-11. 2. GROUNDS RAISED BY THE REVENUE ARE EXTRACTED BELOW : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF RS.9,19,384/- UNDER SECTION 185 R.W.S.184(1) ON ACCOUNT OF INTERE ST ON CAPITAL AND REMUNERATION PAID TO PARTNERS, DESPITE OF FACTS THA T RATIO OF CAPITAL CONTRIBUTION HAS NOT BEEN SPECIFIED IN THE PARTNERS HIP DEED. 2. THE ORDER OF THE LD.CIT(A) MAY BE VACATED AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS INCLUDES THAT THE ASSESS EE IS A FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND TRANSPO RTATION. ITA NO.1944/PUN/2017 M/S. MAHABHARAT CONSTRUCTION CORPORATION 2 DURING THE IMPUGNED ASSESSMENT YEAR, ASSESSEE FILED THE R ETURN OF INCOME DECLARING TOTAL INCOME AT RS.30,44,480/-. ORIGINALLY, T HE AO MADE ADDITION OF RS.1,03,703/- ON ACCOUNTS OF (1) ACCOUNTING CHARGES RS.36,000 U/S.194J OF THE ACT, (2) DISALLOWANCE ON ACCOUNT O F INTEREST AMOUNTING TO RS.51,225/- U/S.36(1)(III) OF THE ACT AND (3) DISALLO WANCE OF VARIOUS EXPENSES AMOUNTING TO RS.16,478/-. IN THE RE CTIFICATION ORDER U/S.154 OF THE ACT, THE AO DISALLOWED RS.3,19,384/- IN TEREST ON CAPITAL PAID TO PARTNERS NAMELY (1) MR. JAYESH KADAM AND M R. BAHUBALI KASHINATH. AO ALSO DISALLOWED SALARY RS. 4,50,000/- AND RS.1,5 0,000/- PAID TO THE ABOVEMENTIONED PARTNERS U/S.185 READ WITH S ECTION 184(1) OF THE ACT. EVENTUALLY, THE AO MADE ADDITION OF RS.9,19,384/- 4. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DELETED T HE ENTIRE ADDITION MADE BY THE AO. WHILE DOING SO, HE RELIED ON THE P ARTNERSHIP DEED. CONTENTS OF PARA NO.5.OF THE ORDER OF CIT(A) ARE R ELEVANT. AGGRIEVED WITH THE ORDER OF CIT(A), THE REVENUE FILED THE PR ESENT APPEAL BEFORE THE TRIBUNAL WITH THE AFOREMENTIONED GROUNDS. 5. AT THE OUTSET, LD. AR FOR THE ASSESSEE SUBMITTED TH AT THE APPEAL FILED BY THE DEPARTMENT IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. THE LD. AR POINTED THAT AS PER CBDT CIRCULAR NO.3/2 018 DATED 11 TH JULY, 2018, THE MONETARY LIMIT FOR FILING OF APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL IS RS.20 LAKHS, THEREFORE, T HE APPEAL FILED BY THE DEPARTMENT IS NOT MAINTAINABLE. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE DEFEND ED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS O F THE CIT(A). HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE TAX EFFECT IN THE PRESENT APPEAL IS LESS THAN RS.20 LAKHS. ITA NO.1944/PUN/2017 M/S. MAHABHARAT CONSTRUCTION CORPORATION 3 7. BOTH SIDES ARE HEARD. ON GOING THROUGH THE FACTS OF THE CASE AND THE ORDERS OF THE REVENUE, I FIND THE TOTAL TAX EFFECT INVO LVED IN THE PRESENT APPEAL WORKS OUT TO BELOW 20 LAKHS. THE CBDT CIR CULAR NO.3/2018 DATED 11 TH JULY, 2018 RAISED THE MONETARY LIMIT OF TAX EFFECT FOR FILING OF APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL T O RS.20 LAKHS. THE CIRCULAR APPLIES TO THE PENDING APPEALS OF THE D EPARTMENT BEFORE THE TRIBUNAL TOO. THUS, IN VIEW OF THE CBDT CIRCULAR , I AM OF THE OPINION THAT THE PRESENT APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT WITHOUT GOING INTO THE MERITS OF THE CASE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 03 RD DAY OF OCTOBER, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 03 RD OCTOBER, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, KOLHAPUR 4. / THE PR.CIT-2, KOLHAPUR 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVA TE SECRETARY , / ITAT, PUNE