Sri Gopal pandey, Garhwa V. ITO WARD-3(5), Daltonganj

ITA 63/RAN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9704 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MONDAL
• Assessee Lawyers: PANKAJ KHEJRIWAL
• Keywords: Business income; Difference of opinion; Change of opinion
• Section: 143(3); 142(1); 234B; 147

Judgement Text

1 ITA NO. 63 /RAN/ 20 1 7 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 63 /RAN/201 7 A.Y. : 20 10 - 201 1 SRI GOPAL PANDEY, PROP: M/S MAA SHARDEY AUTOMOBILES, SOH, PANCHPERWA, GA RWAH - 822114 V S ITO WARD - 3(6), DALTONGAJ P AN NO. : A IJPP 4436 C (APPELLANT ) . RESPONDENT ASSESSEE BY : SHRI PANKAJ KHEJRIWAL, ADVOCATE REVENUE BY :SHRI P.K.MONDAL , JCIT DATE OF HEARING : 2 9 . 05 .201 8 DATE OF PRONOUNCEMENT : 30 . 05 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT ( A ) , RANCHI , DATED 21.12.2016 FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 . FOR THAT INITIATION OF PROCEEDINGS U/S 147 WAS ILLEGAL AND UNJUSTIFIED. PROCEEDING U/S 147 CANNOT BE INITIATED ON THE BASIS OF CHANGE OF OPINION. AT THE TIME OF ASSESSMENT MADE U/S 143(3) ALL INFORMATIONS/DOCUMENTS WERE SUBMITTED BEFORE LD. AS SESSING OFFICER. THERE WAS NO ESCAPEMENT OF INCOME. PROCEEDINGS U/S 147 WAS AB - INITIO NULL AND VOID AND FIT TO BE DELETED. 2 . FOR THAT INITIATION OF PROCEEDINGS U/S 147 WAS AB - INITIO NULL AND VOID. NO RECORDED REASONS WERE SUPPLIED TO THE APPELLANT AS SUCH ASSESSMENT MADE U/S 147 WAS ILLEGAL AND UNJUSTIFIED. 2 ITA NO. 63 /RAN/ 20 1 7 3 . FOR THAT LD. C.I.T(A) WAS NOT JUSTIFIED FOR NOT CONSIDERING REMUNERATION AND INTEREST RECEIVED FROM PARTNERSHIP FIRM AS BUSINESS INCOME. AS PER SECTION 28(V) OF THE I.T. ACT, 1961 THE SALARY, BONUS, COM MISSION OR REMUNERATION RECEIVED FROM PARTNERSHIP FIRM IS TERMED AS BUSINESS INCOME. AS SUCH ORDER PASSED BY LD. C.I.T.(A) WAS BAD IN THE EYE OF LAW AND FIT TO BE DELETED. 4 . FOR THAT THE LD. C.I.T.(A) WAS NOT JUSTIFIED FOR NOT CONSIDERING REMUNERATION AND I NTEREST RECEIVED FROM PARTNERSHIP FIRM AS BUSINESS INCOME ON THE BASIS OF DEFINITION OF BUSINESS AS GIVEN IN THE CASE OF NARAYAN SWEDESHI WEAVING MILLS VS CIT (26 ITR 765 SC). THE ABOVE CASE WAS NOT RELATED TO THE INCOME TAX ACT RATHER IT WAS CASE OF EXCES S PROFIT TAX ACT. THE FINDING WAS GIVEN BY HON'BLE APEX COURT IN THIS CASE IN THE YEAR 1954 I.E. BEFORE ENACTMENT OF PRESENT INCOME TAX ACT,1961. AS SUCH FINDING OF LD. C.I.T.(A) WAS TOTALLY WRONG, UNJUSTIFIED AND ILLEGAL. 5 . FOR THAT THE LD. C.I.T(A) WAS NO T JUSTIFIED FOR NOT ALLOWING EXPENSES OF RS.4,14,420/ - CLAIMED UNDER DIFFERENT HEADS DEDUCTED FROM BUSINESS INCOME RECEIVED AS REMUNERATION AND INTEREST RECEIVED FROM PARTNERSHIP FIRMS. THE EXPENSES WERE FULLY REASONABLE AND RELATED WITH EARNING OF APPELLA NT'S BUSINESS INCOME. AS SUCH THE ORDER PASSED BY LD. C.I.T.(A) HAS NO LEG TO STAND AND FIT TO BE DELETED. 6 . FOR THAT IN ANY VIEW OF THE CASE ADDITION OF RS.4,14,420/ - MADE TO THE TOTAL INCOME IS HIGHLY EXCESSIVE, INCORRECT AND UNJUSTIFIED. 7. FOR THAT INT EREST U/S.234A AND 234B IS TO BE CHARGED ON RETURNED INCOME AND NOT ON ASSESSED INCOME FOLLOWING THE DECISION OF HONBLE JHARKHAND HIGH COURT. 3. AT THE TIME OF HEARING, LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUNDS NO.1 & 2 AND MADE ENDORSEMENT. A CCORDINGLY, GROUND NOS.1 & 2 ARE DISMISSED AS NOT PRESSED. 4 . BRIEF FACTS RELATING TO THE EFFECTIVE GROUNDS NO.3, 4, 5, 6 & 7 ARE THAT THE ASSESSEE DERIVES INCOME FROM TRADING OF PETROL, DIESEL & LUBRICANTS AND FILED THE RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2010 - 2011 ON 18.10.2010 WITH TOTAL INCOME OF RS. 5,58,370/ - AND THE RETURN OF INCOME WAS DULY PROCESSED U/S.143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY 3 ITA NO. 63 /RAN/ 20 1 7 UNDER CASS . SUBSEQUENTLY, NOTICE U/S.143(2) & 142(1) OF THE ACT WERE ISSUED TO THE A SSESSEE. IN COMPLIANCE, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND CASE WAS DISCUSSED . THEREAFTER THE AO COMPLETED THE ASS ESSMENT AND MADE VARIOUS ADDITION S AND ASSESSED TOTAL INCOME AT RS. 5,93,205/ - AND PASSED ORDER U/S.143(3) OF THE ACT, DAT ED 31.12.2012 . SUBSEQUENTLY IT WAS NOTICED THAT THE ASSESSEE HAD NOT CONSIDERED RS.5,14,424/ - IN HIS COMPUTATION. ACCORDINGLY, NOTICE U/S.148 OF THE ACT WAS ISSUED. THE AO ON EXAMINATION OF THE EVIDENCES FILED BY THE ASSESSEE MADE AN ADDITION OF RS.5,14,42 4/ - . THE AO ALSO RETAINED THE ADDITION OF RS.34,835/ - MADE DURING THE COURSE OF ASSESSMENT U/S.143(3) OF THE ACT WAS MADE AND ASSESSED THE TOTAL INCOME AT RS.11,07,630/ - AND PASSED ORDER U/S.147/143(3) OF THE ACT, DATED 16.11.2015. 5 . AGGRIEVED BY THE ASSE SSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND THE FINDINGS OF AO, DISMISSED THE APPEAL OF THE ASSESSEE. 6 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 7 . LD. AR BEFORE US SUBMITTED WITH RESPECT OF GROUND NO.3 & 4 THAT THE INTEREST AND REMUNERATION RECEIVED FROM PARTNERSHIP F IRM IS BUSINESS INCOME. AS PER SECTION 28(V) OF THE I.T. ACT, 1961 THE SALARY, BONUS, COMMISSION OR REMUNERATION RECEIVED FROM PARTNERSHIP FIRM IS TERMED AS 4 ITA NO. 63 /RAN/ 20 1 7 BUSINESS INCOME. FURTHER WITH RESPECT TO GROUND NO.5 & 6, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS CONFIRMED THE ADDITION OF EXPENSES CLAIMED UNDER THE DIFFERENT HEADS OF INCOME DEDUCTED FROM THE BUSINESS INCOME RECEIVED AS REMUNERATION AND INTEREST R ECEIVED FROM PARTNERSHIP FIRMS AND THE LD. AR ALSO SUBSTANTIATED HIS STAND OF REMUNERATI ON RECEIVED FROM THE PARTNERSHIP FIRM RELYING ON THE INCOME TAX DETAILS AND PRAYED FOR ALLOWING THE CLAIM 8 . CONTRA, L D.DR RELIED ON THE ORDERS OF LOWER AUTHORITIES . 9 . WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, ON THE FIRST DISPUTED ISSUE OF TAXABILITY OF REMUNERATION AND INTEREST RECEIVED FROM PARTNERSHIP FIRM AS BUSINESS INCOME. LD. AR SUBMITTED THAT THE ASSESSEE IS HAVING PROPRIETARY BUSINESS AND INTEREST INCOME IS OFFERED SEPARATELY AND ALSO INCOME FROM PARTNERSHIP FIRM IN THE NATURE OF REMUNERATION AND INTEREST ON CAPITAL. THE AO AND THE CIT(A) HAS NOT TREATED THIS INCOME UNDER THE INCOME FROM BUSINESS AND ALSO DISALLOWED THE CLAIM OF EXPENSES OF THE ASSESSEE. BEFORE US, LD. AR DEMONSTRATED WITH COPY OF THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2010 - 2011 IN RESPECT OF PARTNER SHIP NANDLAL PANDEY WHERE ASSESSEES SHARE OF PROFIT AND PARTNERSHIP REMUNERATION WAS DISCLOSED AND FURTHER IN RESPECT OF SECOND CLAIM OF INCOME FROM PARTNERSHIP FIRM M/S LALITA CONSTRUCTION , LD. AR SUBSTANTIATED WITH INCOME TAX RETURN AND ALSO THE PROFIT AND LOSS ACCOUNT, PARTNERS REMUNERATION AND SHARE OF PROFIT. WE FOUND STRENGTH IN THE ARGUMENTS OF LD. AR AND ALSO ON PERUSAL OF THE 5 ITA NO. 63 /RAN/ 20 1 7 SECTION 28(V) OF THE ACT WHICH SPECIFICALLY MENTIONS THA T THE CHARGEABILITY OF INTEREST INCOME AND THE REMUNERATION OF THE PARTNERS WHICH READS AS UNDER : - 28. THE FOLLOWING INCOME SHALL BE CHARGEABLE TO INCOME - TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', (V) ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATEVER NAME CALLED, DUE TO, OR RECEIVED BY, A PARTNER OF A FIRM FROM SUCH FIRM : PROVIDED THAT WHERE ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION, BY WHATEVER NAME CALLED, OR ANY PART THEREOF HAS NOT BEEN ALLOW ED TO BE DEDUCTED UNDER CLAUSE (B) OF SECTION 40, THE INCOME UNDER THIS CLAUSE SHALL BE ADJUSTED TO THE EXTENT OF THE AMOUNT NOT SO ALLOWED TO BE DEDUCTED ; 10 . THEREFORE, WE CONSIDERING THE FACTS AND CIRCUMSTANCES AND PROVISIONS OF LAW, ARE OF THE OPINIO N THAT THE INTEREST INCOME AND REM UNERATION ARE AS PER THE PROVISION OF ACT ARE TAXABLE AS BUSINESS INCOME AND ACCORDINGLY WE ALLOW THIS GROUND OF APPEAL . 11 . SIMILARLY, ON THE SECOND DISPUTED OF ALLOWABILITY OF EXPENDITURE OF RS.4,14,420/ - , WHICH WAS CLAIMED AS DEDUCTION IN THE BUSINESS INCOME. THIS EXPENDITURE WAS NOT ALLOWED TO THE ASSESSEE. WE FIND THAT THE ASSESSEES INCOME IS CHARGEABLE UNDER THE BUSINESS INCOME AS DISCUSSED ABOVE AND ALSO THE ASSESSEE IS ENTITLED FOR THE CLAIM OF EXPENDITURE WHICH IS WHOLLY AND EXCLUSIVELY UTILIZED FOR THE EARNI NG OF ABOVE INCOME ARE ALLOWABLE. LD. AO HAS DISPUTED THE GENUINENESS OF THE EXPENSES, THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD NOT BE DEPRIVED TO CLAIM THE ADDITION IF ALLOWABLE . ACCORDINGLY, WE DIRECT THE AO TO VERIFY THE 6 ITA NO. 63 /RAN/ 20 1 7 EXPENDITURE AS CLAIMED ON THE BUSINESS INCOME AND REMIT TO THE FILE OF AO . THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12 . NEXT GROUND IS WITH REGARD TO CHARGING OF INTEREST U/S.234A&234B OF THE ACT, WHICH IS CONSEQUENTIAL, AND THE AO IS DIRECTED TO CALCUL ATE THE INTEREST U/S.234A & 234B OF THE ACT AS PER THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF AJAY PRAKASH VERMA IN ITA NO.38 OF 2010 REPORTED IN 2013(1) TMI 140. WE ORDER ACCORDINGLY. 13 . IN THE RESULT, APPEAL OF THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 / 05 /201 8 SD/ - SD/ - ( N.S.SAINI ) ( PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI, DATED 30 / 05 /201 8 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, ITAT, RANCHI 1. THE AP PELLANT SRI GOPAL PANDEY, PROP: M/S MAA SHARDEY AUTOMOBILES, SOH, PANCHPERWA, GARWAH - 822114 2. THE RESPONDENT ITO WARD - 3(6), DALTONGAJ 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.