MITUL ENTERPRISES, MUMBAI V. ITO 30(2)(2), MUMBAI

ITA 5962/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6254 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: SEEMA JHA
• Keywords: Set aside
• Section: 40(b); 201

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 5962 /MUM/ 201 8 (ASSESSMENT YEAR 20 1 0 - 1 1 ) I.T.A. NO. 5963/MUM/2018 (ASSESSMENT YEAR 2011 - 12) MITUL ENTERPRISES 20 B.J. INDUSTRIAL ESTATE, KANCHAPADA MALAD WEST MUMBAI - 400 064. PAN :AAEFM5179Q V S . ITO 30(2)(2) MUMBAI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. SEEMA JHA DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 26 . 11 . 20 19 DATE OF PRONOUNCEMENT 0 3 . 0 2 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THESE APPEALS BY THE ASSESSEE ARE AGAINST COMMON ORDER OF LEARNED CIT (A) DATED 8.8.2018 FOR ASSESSMENT YEAR 2010 - 11 & 2011 - 12. 2. C OMMON GROUNDS OF APPEAL RAISED RELATES TO THE DISALLOWANCE OF PAR TNERS REMUNERAT ION AND INTERESTS . 3. B RIEF FACTS OF THE CASE ARE : - DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PRODUCE THE COPY OF PARTNERSHIP DEE D . TH E ASSESSEE SUBMITTED COPY OF PARTN E R SHIP DEE D. IT WAS SEEN THAT IN THE PARTNERS DEED S O SUBMITTED THERE WAS NO CLAUSE IN RESPECT OF INTE REST AND/OR REMUNERATION TO PARTNERS. THIS P ARTNERSHIP DEED WAS MADE ON THE STAMP PAPER OF RS. 100/ - BEARING DATE STAMP OF 27.04.2004 AND 30.04.2004 HAVING SI. NO. 2908 OF KIRAN SHINDE (STAMP V ENDOR). MITUL ENTERPRISES 2 4. IN THESE BACGROUND THE ASSESSING OFFICER INFER RED THAT THE INTEREST AND REMUNERATION IS PAID BY THE ASSESSEE FIRM WITHOUT AUTHORITY OF PARTNERSHIP DEED. HENCE, THE INTEREST AND REMUNERATION SO PAID BY THE ASSESSEE FIRM IS NOT ALLOWABLE AS PER SECTION 40(B) IF THE ACT. ACCORDINGLY, REMUNERATION OF (TOTAL AMOUNT OF RS. 11,41,835/ - ) RS. 6,12,395/ - AND INTEREST OF RS. 5,29,440/ - WA S DISALLOWED U/S. 40B OF THE ACT, AGAINST WHICH THE ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A) . 5. LEARNED CIT (A) NOTED THE ASSES SEE SUBMISSION AS UNDER : - AS THE ORIGINAL PARTNERSHIP DEED DATED 09.04.1992 WAS MISPLACED, I HAD SUBMITTED A XEROX COPY OF PARTNERSHIP DEED DATED 30.04.2004. W HEREIN CLAUSES MENTIONING REMUNERATION AND INTEREST ON CAPITAL TO WORKING PARTNERS W AS NO T MENT IONED. HOWEVER, THE ABOVE CLAUSES WERE MENTIONED IN ORIGINAL STAMPED DEED. I HAVE FOUND OUT THE ORIGINAL PARTNERSHIP DEED DATED 09.04.1992. I AM ENCLOS I NG THE ORIGINAL PARTNERSHIP DEED ALONG WITH THE XEROX COPY. THE ABOVE PRACTICE OF ALLOWING REMUNERATIO N TO WORKING PARTNERS AND INTEREST ON CAPITAL OF PARTNERS WERE FOLLOWED THROUGHOUT FROM BEGINNING TO CURRENT YEAR. HENCE, THERE WAS NO MALAFIED INTENSION AND PARTNERS ARE AWARE OF IT. KINDLY ALLOW THIS DEDUCTION . 6. H OWEVER LEARNED CIT (A) WAS NOT CONVINC ED. HE UPHELD THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER : - FROM THE FINDINGS OF THE ABOVE AND THE SUBMISSION OF THE APPELLANT IT IS OBSERVED THAT IN THE ORIGINAL PARTNERSHIP DEED DATED 09.04.1992, THERE ARE CLAUSES MENTIONING THE REMUNERA TION AND INTEREST ON CAPITAL TO WORKING PARTNERS, WHILE IN THE SUBSEQUENT PARTNERSHIP DEED DATED 30.04.2004, CLAUSES MENTIONING REMUNERATION AND INTEREST ON CAPITAL TO WORKING PARTNERS ARE ABSENT. THE PARTNERSHIP DEED DATED 09 04 1992 HAS BEEN SUBMITTED FO R VERIFICATION OF THE UNDERSIGNED DURING THE APPELLATE PROCEEDINGS IN MY CONSIDERED OPINION, A SUBSEQUENT PARTNERSHIP DEED WILL SUPERSEDE THE ORIGINAL LATER ON, WILL BE IN FORCE AND NOT THE PARTNERSHIP DEED WHICH WAS PREPARE D EARLIER. SIN CE IN THE INSTANT CASE, THE AMENDED PARTNERSHIP DEED DATED 30 TH APRIL, 2004, DOES NOT CONTAIN THE PROVISIONS FOR PAYMENT OF REMUNERATION AND INTEREST ON CAPITAL TO WORKI NG PARTNERS, THE AO IS JUSTIFIED IN DISALLOWING THE SAME. HENCE, THE DISALLOWANCE REMUNERATION OF (TOTAL A MOUNT OF RS. 11,41,835/ - ) RS. 6, 12 ,395/ - AND INTEREST OF RS. 5,29,440 / - ARE CONFIRMED . 7. A GAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION WE FIND MITUL ENTERPRISES 3 THAT THE PARTN ER S REMUNERATION AND INTEREST IN THIS CASE HAS BEEN DISALLOWED ON THE BASIS OF A PHOTO COPY OF PARTNERSHIP DEED WHICH DID NOT CONTAIN THE NECESSARY CLAUSE FOR THE PARTNER REMUNERATION AND INTEREST. HOWEVER THE ASSESSEE DID SUBMIT THE ORIGINAL PARTNERSHIP DEED WHICH CONTAINED THE NECESSARY CLAUSES. HOWEVER THE LEARNED CIT (A) CONSIDERED THE PHOTO COPY PARTNERSHIP DEED AS SACROSANCT AND CONSIDERED THAT THE SAME WAS AN AMENDMENT OF THE ORIGINAL DEED. IN OUR CONSIDERED OPINION THERE IS NO COGENT BASIS FOR THE L EARNED CIT APPEALS TO COME TO SUCH A SURMISE. WHEN THE ASSESSEE IS SUBMITTING THAT THE PHOTO COPY WAS SUBMITTED BY MISTAKE AND THE ORIGINAL COPY WHICH WAS IN EXISTENCE DID CONTAIN THE SAID CLAUSES AND THE SAID ORIGINAL PARTNERSHIP DEED WAS SUBMITTED BEFORE THE LEARNED CIT (A) IN OUR CONSIDERED OPINION THE REJECTION OF THE SAME BY LD CIT (A) IS NOT SUSTAINABLE . THE SAME IS BASED UPON CONJECTURES OF LEARNED CIT(A) UNSUSTAINABLE IN LAW. A CCORDINGLY WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE DIS ALLOWANCE MADE IN THIS REGARD. 8. IN THE RESULT THES E APPEALS BY THE ASSESSEE STAND ALLOWE D. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 3.2 . 20 20 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 0 3 / 0 2 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI