M/s Rajendra Singh Kiledar, V. The DCIT, 2(1),

ITA 611/IND/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1495 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-11-2009
• Assessment Year: misc
• Appeal Filed On: 18-10-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: PRADEEP GUPTA
• Keywords: Depreciation
• Section: 195; 148; 139

Judgement Text

PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AAHFR2255H I.T.A.NO. 611/IND/2006 A.Y. : 2003-04 M/S.RAJENDRA SINGH KILEDAR, DY. CIT, CONTRACTOR, VS 2(1), C/O SHRI PRADEEP KHANDELWAL, C. A., GURUDWARA ROAD, BETUL. BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI PRADEEP GUPTA, ADV. RESPONDENT BY : SMT. APARNA KARAN, SR. DR DATE OF HEARING : 03.11.2009 O R D E R PER GUPTA, A.M. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE CIT(A)- I, BHOPAL, DATED 31.07.2006, FOR THE ASSESSMENT YEA R 2003-04. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NOS. 1 & 2, BEING OF GENERAL IN NATURE, WERE NOT PRESSED, HENCE, DISMISSED AS NOT PRESSED. 4. IN GROUND NOS. 3, 4, 5 & 6 (A) & (B), THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN DISALLOWING R EMUNERATION AND PAGE 2 OF 6 INTEREST PAID BY THE FIRM TO THE PARTNERS FOR THE REASON THAT THE ASSESSEE FIRM HAD VIOLATED THE PROVISIONS OF SECTION 184(4) OF THE INCOME-TAX ACT, 1961. 5. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPANY FILED RETURN OF INCOME ON 30.11.2003, WHICH WAS PROCESSED U/S 143(1 ). THERE WAS A CHANGE IN THE CONSTITUTION OF THE PARTNERSHIP FIRM DUE TO RETIREMENT OF TWO PARTNERS IN THE RELEVANT FINANCIAL YEAR. HOWEVER, T HE ASSESSEE FIRM DID NOT ENCLOSE COPY OF NEW PARTNERSHIP DEED WITH THE RETUR N SO FILED. SUBSEQUENTLY, THE NOTICE U/S 148 WAS ISSUED FOR DIS ALLOWING INTEREST AND REMUNERATION TO PARTNERS. THE ASSESSEE FILED RETURN IN RESPONSE TO SUCH NOTICE AND ENCLOSED COPY OF NEW PARTNERSHIP DEED TH EREWITH. THE A.O., HOWEVER, FORMED AN OPINION THAT THE ASSESSEE FIRM H AD TO FILE COPY OF NEW PARTNERSHIP DEED ALONGWITH RETURN OF INCOME FILED B Y IT ORIGINALLY ON 30.11.2003. HENCE, THERE WAS A VIOLATION OF PROVISI ONS OF LAW AS CONTAINED IN SECTION 184(4) OF THE ACT. THEREAFTER, THE A.O. TREATED THE ASSESSEE AS AOP AS PER THE PROVISIONS OF SECTION 18 5 OF THE INCOME-TAX ACT, 1961, AND DISALLOWED INTEREST AND REMUNERATION PAID BY THE ASSESSEE TO THE PARTNERS. THE LD. CIT(A), ON APPEAL, ALSO CO NFIRMED THE ACTION OF THE A.O. AGREEING WITH THE FINDINGS OF THE A.O. AGG RIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN SECTION 184(4),AS WELL AS IN SECTION 148, THE WORDS RETURN OF INCOME HAD BEEN PAGE 3 OF 6 USED. HENCE, WHEN THE ASSESSEE FILED THE RETURN IN RESPONSE TO NOTICE U/S 148 AND ENCLOSED COPY OF NEW PARTNERSHIP DEED THERE WITH, IT COMPLIED WITH THE PROVISIONS OF SECTION 184(4) OF THE ACT, A ND, THEREFORE, THE VIEW TAKEN BY THE REVENUE AUTHORITIES WAS NOT CORRECT IN LAW. HE FURTHER CONTENDED THAT EVEN AS PER SECTION 148, THE RETURN FILED IN RESPONSE TO NOTICE ISSUED THEREUNDER, WAS TO BE TREATED AS A RE TURN FILED U/S 139 OF THE ACT. HENCE, IN THESE CIRCUMSTANCES, THE ASSESSEES ACTION OF FILING NEW PARTNERSHIP DEED ALONGWITH SUCH RETURN RESULTED INT O COMPLIANCE OF PROVISIONS OF SECTION 184(4) OF THE ACT. THE LEARNE D COUNSEL FOR THE ASSESSEE, THEREAFTER, CONTENDED THAT PROVISIONS OF SECTION 184(4)/184(A) WERE OF THE DIRECTORY NATURE AND IF THE ASSESSEE FI LED REVISED PARTNERSHIP DEED IN THE COURSE OF ASSESSMENT PROCEEDINGS SUBSEQ UENT TO FILING OF RETURN OF INCOME, THEN, THIS ACTION WAS SUFFICIENT COMPLIANCE OF THESE PROVISIONS. FOR THIS PROPOSITION, THE LEARNED COUNS EL FOR THE ASSESSEE RELIED ON FOLLOWING JUDICIAL DECISIONS :- (A) SONA TRACTORS V. A.O., (2004) 3 SOT 576 (ASR) (B) ITO VS. VXL INDIA, (2008) 279 CTR 242 (GUJ) (C) CIT VS. RAI BAHADUR BISSESSWARLAL MOTILALL MALWASHI TRUST, 1992) 195 ITR 825 ( CAL ). (D) JT. CIT VS. M/S. ALPINE INDUSTRIES LTD, (2006) 6 IT J 624 (IND). (E) CIT VS. M/S. PANAMA CHEMICAL WORKS, INDORE, (2006) 6 ITJ 707 (MP) PAGE 4 OF 6 (F) DY. CIT V. M/S. BLUE CHIP TRADERS, (2004) 1 ITJ 110 (IND) (G) ISHAR DASS SAHNI & SONS V. DY. CIT, (2001) 77 ITD 256 (DEL). (H) PUNJAB TRACTORS & AGRICULTURAL IMPLEMENTS V. ITO, (2004) 90 TTJ 717 (CHD.) (I) ACIT VS. SAPAT SALES CORPN., (2000) 28 ITC 527 (MUM). 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, PLACED STRONG RELIANCE ON THE ORDERS OF THE REVENUE AUTHOR ITIES. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 9. IT IS NOTED THAT THERE IS A CHANGE IN THE CONSTITUT ION OF THE ASSESSEE FIRM IN THE RELEVANT PREVIOUS YEAR AND THE ASSESSEE HAS FILED CERTIFIED COPY OF REVISED PARTNERSHIP DEED WITH THE RETURN FILED IN RESPONSE TO NOTICE ISSUED U/S 148, THOUGH THE ASSESSEE DID N OT FILE SUCH COPY ALONGWITH THE ORIGINAL LETTER. THE PROVISIONS OF SE CTION 148 EXPRESSLY STATE THAT THE PROVISIONS OF THIS ACT SHALL APPLY I N A MANNER AS IF SUCH RETURN HAD BEEN FURNISHED U/S 139 OF THE ACT. FURTH ER, AS PER THE PROVISIONS OF SECTION 184(4) REVISED INSTRUMENT OF PARTNERSHIP DEED SHOULD BE FURNISHED ALONGWITH RETURN OF INCOME. HAV ING REGARD TO THESE PROVISIONS, IN OUR OPINION, THE MOMENT NOTICE U/S 1 48 IS ISSUED AND A RETURN AS A CONSEQUENCE THEREOF IS FILED, THE ASSES SEE FILES REVISED PAGE 5 OF 6 INSTRUMENT OF PARTNERSHIP DEED ALONGWITH SUCH RETUR N, THERE WOULD BE NO REACH OF PROVISIONS OF SECTION 184(4) OF THE ACT. WE ARE FURTHER OF THE VIEW THAT THE DECISIONS CITED BY THE LEARNED COUNS EL FOR THE ASSESSEE ALSO SUPPORT THE CLAIM OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE ASSESSEE FIRM SHOULD BE ASSESSED AS SUCH AND RE MUNERATION AND INTEREST PAID TO THE PARTNERS BE ALLOWED. THE A.O. IS DIRECTED ACCORDINGLY. THUS, GROUND NOS. 3, 4, 5, 6 (A) & (B) ARE ALLOWED. 10. IN GROUND NOS. 6(C), (D) AND (E), THE ASSESSEE AGGR IEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE AD HOC DIS ALLOWANCE OF RS. 41,433/-, 4634/- AND RS. 1705/- MADE BY THE ASSESSI NG OFFICER OUT OF JEEP AND MOTOR CYCLE EXPENSES, DEPRECIATION ON JEEP AND TELEPHONE EXPENSES RESPECTIVELY ON ACCOUNT OF PERSONAL USE. 11. THE FACTS, IN BRIEF, ARE THAT THE A.O. MADE THESE D ISALLOWANCES @ 10 % FOR PARTIALLY PERSONAL/NON-BUSINESS USE PROB ABILITY. THE LD. CIT(A) ALSO CONFIRMED THE SAME, AS HE WAS OF THE OP INION THAT THE A.O. WAS VERY FAIR AND REASONABLE. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 12. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED THE F ACTS AND ARGUED THE MATTER AT LENGTH. 13. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). PAGE 6 OF 6 14. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUES ON HAND, WE HOLD THAT THE ORDER OF THE LD. C IT(A) IS REASONABLE BOTH ON THE ASPECT OF PERSONAL USE AND PERCENTAGE O F DISALLOWANCE. HENCE, NO INTERFERENCE IS CALLED FOR. THUS, GROUNDS NO. 6(C),(D) & (E) ARE REJECTED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2009. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH NOVEMBER, 2009. CPU* 3.5D6