THE DCIT, CIRCLE-5(1), Visakhapatnam V. M/s Pavan Promoters, Visakhapatnam

ITA 619/VIZ/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9012 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MURTHY NAIK
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HONBLE JUDICIAL MEMBER & SHRI G. MANJUNATHA, HONBLE ACCOUNTANT MEMBER ITA NO. 619/VIZ/2013 (ASST. YEAR : 2008-09) DCIT, CIRCLE-5(1), VISAKHAPATNAM. V. M/S. PAVAN PROMOTERS, D.NO. 31/27-51, MARGADARSHI COMPLEX, STEEL PLANT P.O., VISAKHAPATNAM. PAN NO. AAJEP 6140 R (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE. DEPARTMENT BY : SHRI MURTHY NAIK SR.DR DATE OF HEARING : 18/04/2017. DATE OF PRONOUNCEMENT : 21/04/2017. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM, DATED 05/08/2013 FOR THE ASSESSMENT YEARS 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A FIRM, FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS. 12,64,824/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT'). SUBSEQUENTLY, A SURVEY WAS CONDUCTED AND AFTER DUE PROCESS, ASSESSMENT WAS COMPLETED BY ESTIMATING INCOME OF THE ASSESSEE AT 2 ITA NO.619/VIZ/2013 (M/S. PAVAN PROMOTERS) 12.5%. THE ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF REMUNERATION AND INTEREST PAID TO ITS PARTNERS. 3 . ON APPEAL, LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW CLAIM OF REMUNERATION AND INTEREST PAID TO THE PARTNERS, IF OTHER CONDITIONS ARE RELATING TO SUCH CLAIM ARE SATISFIED. 4. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6 . WE HAVE HEARD DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THIS CASE, THE ASSESSING OFFICER HAS ESTIMATED THE INCOME OF THE ASSESSEE AT 12.5% AND ITS CLAIM IN RESPECT OF REMUNERATION AND INTEREST PAID TO ITS PARTNERS IS NOT ALLOWED. ON APPEAL, LD. CIT(A) DIRECTED THE ASSESSING OFFICER, IF OTHER CONDITIONS RELATING TO SUCH CLAIM ARE SATISFIED, THE SAME MAY BE ALLOWED. PROVISO TO SUB-SECTION (2) OF SECTION 44AD PROVIDES THAT WHERE THE ELIGIBLE ASSESSEE IS A FIRM, THE SALARY AND INTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INCOME COMPUTED UNDER SUB-SECTION (1) SUBJECT TO THE CONDITIONS AND LIMITS SPECIFIED IN CLAUSE(B) OF SECTION 40. IN VIEW OF THE ABOVE PROVISO, IF THE ASSESSEE IS SATISFIED THE CONDITIONS AS SPECIFIED IN CLAUSE (B) OF SECTION 40, THE ASSESSING OFFICER IS DIRECTED TO ALLOW REMUNERATION AND INTEREST PAID TO ITS PARTNERS. IN VIEW OF THE ABOVE, WE FIND NO ERROR IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 3 ITA NO.619/VIZ/2013 (M/S. PAVAN PROMOTERS) 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF APRIL, 2017. SD/- SD/- (G. MANJUNATHA) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST APRIL, 2017. VR/- COPY TO: 1. THE ASSESSEE - M/S. PAVAN PROMOTERS, D.NO. 31/27-51, MARGADARSHI COMPLEX, STEEL PLANT P.O., VISAKHAPATNAM. 2. THE REVENUE - DCIT, CIRCLE-5(1), VISAKHAPATNAM. 3. THE CIT-1, VISAKHAPATNAM. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R., VISAKHAPATNAM. 6. GUARD FILE. BY ORDER