TULIP VALVES AND CONTROLS , CHENNAI V. ACIT, NCC-15(1), CHENNAI

ITA 3529/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4766 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR BALINA SURESH KUMAR
• Assessee Lawyers: BASKAR
• Keywords: Depreciation; TDS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./ I.T.A. NO.3529/CHNY/2018 $ $ / ASSESSMENT YEAR : 2012-13 M/S.TULIP VALVES AND CONTROLS , 19,VASANTHA PRESS ROAD, ADYAR,CHENNAI. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 15(1), WANAPARTY BLOCK, CHENNAI 600 034. [PAN AADFT 5131 G] ( / APPELLANT) ( /RESPONDENT) ( ) / APPELLANT BY : MR.BASKAR,ADVOCATE +,( ) /RESPONDENT BY : DR.BALINA SURESH KUMAR, JCIT, D.R ) /DATE OF HEARING : 16-07-2019 ) /DATE OF PRONOUNCEMENT : 08-08-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-16, CHENN AI DATED 31.10.2018 FOR ASSESSMENT YEAR 2012-13. ITA NO. 3529/CHNY/2018 :- 2 -: 2. THE ASSESSEE RAISED FOLLOWING GROUNDS FOR OUR C ONSIDERATION. 1. THE ORDER OF THE CIT(A) IS ERRONEOUS, ILLEGAL, O PPOSED TO FACTS AND IS LIABLE TO BE REVERSED. 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF REMUNERATION PAID TO THE PARTNERS AMOUNTING TO RS.5 ,50,0001-. 2.2 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH AT THERE IS NO LEGAL REQUIREMENT TO REGISTER A PARTNERSHIP DEED. 2.3 THE LEARNED CIT(A) ERRONEOUSLY HELD THAT THE OM ISSION TO REGISTER THE SUPPLEMENTAL PARTNERSHIP DEED WILL REN DER THE AMENDED CLAUSES UNEXECUTABLE. 2.4 THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED THE CL AIM OF REMUNERATION PAID TO PARTNERS CONSIDERING THE PARTN ERSHIP DEED DATED 11.01.2010. 3.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF DEPRECIATION ON MOTOR- CARS AMOUNTING TO RS.1 ,97,7 07/-. 3.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT 'COMMERCIAL VEHICLE' INCLUDES THE LIGHT MOTOR VEHICLES USED FOR THE PURPOSE OF BUSINESS AS PER THE MOTOR VEHICLES ACT, AND NOT NEC ESSARILY TO A FREIGHT OR GOODS VEHICLE. 4. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE PL ETHORA OF JUDGMENTS RELIED UPON BY THE APPELLANT BEFORE HIM. 5. ANY OTHER GROUND/S THAT MAY BE RAISED AT THE TIM E OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE NAMELY M/S.TULIP VALVES AND CONTROLS IS A PARTNERSHIP FIRM. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND ASSEMBLING OF VALVES. THE RETURN OF ITA NO. 3529/CHNY/2018 :- 3 -: INCOME FOR THE ASSESSMENT YEAR 2012-13 WAS FILED ON 01.09.2012 DECLARING A TOTAL INCOME OF RS.78,23,870. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ASSISTA NT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE-15(1), CHENNAI, (HEREINAFTER REFERRED AS AO') VIDE ORDER DATED 23.02.2015 PA SSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AC CEPTING THE RETURNED INCOME. SUBSEQUENTLY, THE ASSESSING OFFICER BASED ON THE FOLLOWING INFORMATION HAD COME TO CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT TO TAX. I) IT IS SEEN FROM P&L A/C FOR ASSESSMENT YEAR 2012-13 THAT A SUM OF RS.9,10,000/- HAS BEEN ALLOWED AS PARTNERS SALA RY. BUT IT IS SEEN FROM THE PARTNERSHIP DEED DATED 1.1.2008 OF THE FIRM THAT THE REMUNERATION PAYABLE TO WORKING PARTNERS I S RS.15,000/- P.M FOR EACH OF THE 2 WORKING PARTNERS SH.R.MOHAN AND SH. R.SUBBIAH. AS PER SECTION 40(B), ONLY THE AMOUNT AUTHORIZED BY THE PARTNERSHIP DEED IS AL LOWABLE AS DEDUCTION TOWARDS REMUNERATION PAID BY A FIRM TO ITS WORKING PARTNER. HENCE, THE EXCESS ALLOWED REMUNERA TION AMOUNTING TO RS.5,50,000/- HAS TO BE DISALLOWED. ITA NO. 3529/CHNY/2018 :- 4 -: II) IT IS SEEN FROM THE FIXED ASSETS STATEMENT, THAT THERE IS EXCESS ALLOWANCE OF DEPRECIATION ON THE FOLLOWING ASSETS: ASSET/VALUE ALLOWABLE DEPRECIATION ALLOWED DEPRECIATION EXCESS RATE AMOUNT RATE AMOUNT HONDA CAR/ 2,63,169 15% 39475 50% 131585 92110 TOYOTA CAR/ 3,01,706 15% 45256 50% 150853 105597 1,97,707 III) IT IS SEEN FROM 26 AS THAT TDS FOR A.Y 2012-13 IS O NLY RS.105/-. HOWEVER, TDS TAKEN INTO ACCOUNT IN COMPUTATION OF T AX IS RS.5366/-. THE DIFFERENCE OF RS.5255/- BEING EXCESS ALLOWED TDS SHOULD BE RECOVERED FROM THE ASSESSEE. ACCORDINGLY RE-OPENED THE ASSESSMENT BY ISSUE OF NO TICE U/S.148 OF THE ACT ON 29.03.2016. IN RESPONSE TO NOTICE U/S.14 8, NO RETURN OF INCOME WAS FILED AND THE ASSESSMENT WAS COMPLETED A FTER ISSUING NOTICE U/S.143(2) OF THE ACT VIDE ORDER DATED 26.1 2.2016 PASSED U/S.143(3) R.W.S.147 OF THE ACT TOTAL INCOME OF RS. 85,76,832/-. WHILE DOING SO, THE ASSESSING OFFICER MADE ADDITIONS ON A CCOUNT OF EXCESS REMUNERATION PAID TO PARTNERS OF RS.5,50,000/- AND EXCESS DEPRECIATION OF RS.1,97,707/- AND ADDITION OF TDS L IABILITY OF RS.5,255/- . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD.CIT(A), WHO VIDE IMPUGNED ORDER DISMISSED THE APPEAL. BEING AGGRIEVED WITH ITA NO. 3529/CHNY/2018 :- 5 -: THE ORDER OF THE LD.CIT(A), THE REVENUE IS BEFORE U S IN THE PRESENT APPEAL. 4. IT IS SUBMITTED BY LD.AR THAT THE REMUNERATION TO THE PARTNERS CANNOT BE DISALLOWED FOR WANT OF REGISTRAT ION OF PARTNERSHIP FIRM. AS REGARDS DEPRECIATION, IT IS SUBMITTED THAT DEPRECIATION ON MOTOR CAR IS ELIGIBLE FOR HIGHER DEPRECIATION I.E.5 0% AS THE MOTOR VEHICLE PURCHASED FALLS WITHIN THE DEFINITION OF CO MMERCIAL VEHICLE. 5. ON THE OTHER HAND, THE SENIOR LD.DR PLACED RELI ANCE ON THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO.2 OF APPEAL CHALLENGES THE DISALLOWANCE OF REMUNERATION PAID TO PARTNERS. THER E IS NO REQUIREMENT UNDER THE LAW THAT THE PARTNERSHIP FIRM SHOULD BE DULY REGISTERED UNDER THE PARTNERSHIP ACT. THEREFORE, R EMUNERATION PAID TO PARTNERS CANNOT BE DISALLOWED FOR WANT OF REGISTRAT ION OF FIRM. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALL OW THE REMUNERATION PAID TO PARTNERS OF RS.5,50,000/-. ACCORDINGLY, GRO UNDS NOS.2.1 TO 2.4 STANDS ALLOWED. ITA NO. 3529/CHNY/2018 :- 6 -: 6.1 AS REGARDS DISALLOWANCE OF HIGHER RATE OF DEPR ECIATION ON VEHICLE, WE FIND THAT REASONING OF THE LD.CIT(A) VI DE PARA 7.4 IS BASED ON PROVISIONS OF INCOME TAX RULES GOVERNING THE ALL OWANCE OF DEPRECIATION AND THEREFORE, WE DO NOT ANY MERIT IN THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 08 TH AUGUST, 2019, AT CHENNAI. SD/- SD/- ( . ) (DUVVURU RL REDDY) ' $ /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER / CHENNAI 2 / DATED: 08 TH AUGUST, 2019. K S SUNDARAM ) +45 65 / COPY TO: 1 . ( / APPELLANT 3. 7 () / CIT(A) 5. 5 +< / DR 2. +,( / RESPONDENT 4. 7 / CIT 6. $ / GF