M/s Antaryami Panda & Co, V. ITO, Khurda

ITA 293/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52374 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 28-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: BHIMSEN SAHOO

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 293/CTK/2011 (ASSESSMENT YEAR 2007 - 08) M/S.ANTARYAMI PANDA &CO., AT: BRAJARAJ PUR, P.O.I.N.S.CHILIKA, P.S.BAUGAON,DIST. KHURDA PAN: AAKFA 6215 D VERSUS INCOME - TAX OFFICER, KHURDA WARD, KHURDA. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI BHIMSEN SAHOO, AR FOR THE RESPONDENT SHRI S.C.MOHANTY, DR ORDER SHRI K.S.S.PRASAD R AO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.18.3.2011 IN CONFIRMING THE NON - ALLOWANCE OF SALARY/REMUNERATION OF 76,000 TO PARTNERS AND INTEREST ON CA PITAL OF THE PARTNERS OF 93,600. 2. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED IN THE APPEAL AND THEIR LEGAL IMPLICATIONS. 3 . ON CAREFUL CONSIDERATION OF THE MATERIALS AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBM ISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT THE ASSESSEE IS A CIVIL WORKS CONTRACTOR. IT FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 3.7.2007 DECLARING INCOME OF 1,28,600. THE SAID RETURN WAS PROC ESSED U/S.143(1) ON 10.1.2008 RESULTING IN A REFUND OF 42,150. LATER ON IN THE IMPUGNED ASSESSMENT ORDER PASSED U/S.147/144 OF THE I.T.ACT,1961, DUE TO NON - APPEARANCE OF THE ASSESSEE, THE ASSESSING OFFICER ESTIMATED THE GROSS PROFIT @8%. HE DISALLOWED T HE CLAIM OF SALARY/REMUNERATION PAID TO PARTNERS AND ALSO THE CLAIM OF INTEREST ON CAPITAL OF THE PARTNERS. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) UPHELD THE ITA NO.293/CTK/2011 2 DISALLOWANCE OF THE ABOVE CLAIM OF THE ASSESSEE ON THE GROU ND THAT SINCE THE ASSESSMENT ORDER WAS COMPLETED U/S.144 OF THE ACT, THE SALARY PAID TO PARTNERS AND INTEREST PAID TO PARTNERS CANNOT BE ALLOWED IN VIEW OF SECTION 184(5) OF THE ACT. FROM THE ABOVE UNDISPUTED FACTS, IT IS NOTICED THAT THE IMPUGNED ASSESSME NT ORDER HAS BEEN PASSED U/S.147/144 OF THE ACT IN THE STATUS FIRM. INCOME HAS BEEN ESTIMATED @8 % ON THE GROSS RECEIPTS, THE ASSESSEE BEING A CIVIL WORKS CONTRACTOR. IT IS THE CONTENTION OF THE LEARNED AR OF THE ASSESSEE THAT THE ASSESSING OFFICER HAD NO T GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE THE PARTNERSHIP DEED COPY DT.1.4.2003 AND RECONSTITUTION PARTNERSHIP DEED COPY DT.1.4.2006 AND THEREFORE, THOSE WERE PRODUCED BEFORE THE LEARNED CIT(A). WITHOUT CONSIDERING THIS ASPECT OF THE CASE, THE LEARNED CIT( A) HAS CAME TO CONCLUDE THAT SINCE THE ASSESSMENT HAS BEEN FRAMED U/S.144 OF THE ACT THE SALARY PAID TO PARTNERS AND INTEREST PAID TO PARTNERS CANNOT BE ALLOWED. SINCE THE INCOME HAS BEEN ESTIMATED BY THE ASSESSING OFFICER @8% ON THE GROSS RECEIPT AS PROVI DED U/S.44AD, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION OF SALARY TO PARTNERS AND INTEREST ON CAPITAL OF PARTNERS. IN VIEW OF THIS, THE IMPUGNED ADDITIONS MADE ON ACCOUNT OF SALARY/REMUNERATION OF 76,000 TO PARTNERS AND INTEREST ON CAPITAL OF THE PARTNERS OF 93,600 IS HEREBY DIRECTED TO BE DELETED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN OPEN COURT ON DT. 5 TH AUGUST, 2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 5 TH AUGUST, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.293/CTK/2011 3 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: M/S.ANTARYAMI PANDA &CO., AT: BRAJARAJPUR, P.O.I.N.S.CHILIKA, P.S.BAUGAON,DIST. KHURDA 2. THE RESPONDENT: INCOME - TAX OFFICER, KHURDA WARD, KHURDA. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.