Assistant Commissioner of Income Tax, Circle -1(2), Surat V. M/s. Indo Aurlicht Manufacturing Company, Surat

ITA 63/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9254 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Business income
• Section: 143(3); 10AA; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO. 63/SRT/2018 (AY 2013-14) (H EARING IN VIRTUAL COURT) ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), ROOM NO. 213, 2 ND FLOOR, AYAKAR BHAVAN, MAJURAGATE, SURAT- 395001 VS M/S INDO AUERLICHIT MANUFACTURING CO. PLOT NO.30 & 31, SURAT SPECIAL ECONOMIC ZONE, SACHIN,SURAT-394230 PAN : AACFI 3083 R REVENUE / APPELLANT ASSESSEE /RESPONDENT ASSESSEE BY SHRI S.N.SOPARKAR, SENIOR ADVOCATE WITH MRS. URVASHI SHODHAN, ADVOCATE REVENUE BY SHRI O.P.VAISHNAV, CIT-DR DATE OF HEARING 28.07.2021 DATE OF PRONOUNCEMENT 04.08.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, SURAT DATED 13.11.2017FOR ASSESSMENT YEAR (AY) 2013-14. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO BY TREATING BUSINESS INCOME OF RS.14,90,99,385/- AS INCOME FROM OTHER SOURCES AND RESTRICTING CLAIM OF DEDUCTION U/S 10AA OF THE IT ACT, WITHOUT APPRECIATING THE FACTS THAT THE ASSESSING OFFICER HAS ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 2 MADE RIGHT COMPARISON WITH FARGO MANTLE PRODUCTS PRIVATE LIMITED WHICH IS ENGAGED IN THE SIMILAR TYPE OF BUSINESS? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 80(IA)(10) R.W.S. 10AA(9) IN GIVING DEDUCTIONS OF INTEREST ON CAPITAL OF THE ASSESSEE FIRM AFTER FINDING THAT THE ASSESSEE HAD TAKEN UNDUE BENEFITS OF SECTION 10AA BY NOT CLAIMING INTEREST ON CAPITAL WHICH RESULTED INCREASE IN EXEMPTED PROFIT OF THE ASSESSEE? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN NOT APPRECIATING THE FACT THAT BY NOT PROVIDING INTEREST TO THE PARTNERS, THE FIRM HAS CLAIMED HIGHER PROFITS LEADING TO HIGHER CLAIM OF DEDUCTION U/S 10AA OF THE ACT AND THUS, DEVOIDING THE REVENUE FROM DUE AMOUNT OF TAX? 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN MANUFACTURING OF THE GAS MANTLES, NON-RADIO-ACTIVE MANTLES, FLEXIBLE MANTLES, CLIP ON MANTLES, DOUBLE TIE ON FLEXIBLE MANTLE, PERFORMED HARD INVERTED GAS LIGHT MANTLE, SOFT UPRIGHT MANTLE ETC., AT SPECIAL ECONOMIC ZONE AT SURAT. THE ASSESSEE IS QUALIFIED FOR DEDUCTION UNDER SECTION 10AA OF THE INCOME TAX ACT, 1961 (THE ACT).THE ASSESSEE IS STARTED MANUFACTURING IN ASSESSMENT YEAR 2009-10 AND ACCORDINGLY CLAIMING DEDUCTION UNDER SECTION 10AA OF THE ACT FOR ASSESSMENT YEAR 2009-10 ONWARDS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 28.09.2013, ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 3 DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN GROSS PROFIT (GP) @ 84.01% AND NET PROFIT (NP) AT 76.16%.THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 10AA OF THE ACT. THE ASSESSING OFFICER DOUBTED HIGH MARGIN PROFITABILITY OF THE ASSESSEE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH DETAILS OF COMPARABLE INSTANCES OF COMPANIES ENGAGED IN MANUFACTURING OF SIMILAR PRODUCT. THE ASSESSEE FIELD ITS REPLY, IN REPLY THE ASSESSEE CONTENDED THAT THERE IS NO COMPARABLE COMPANY WHICH IS MANUFACTURING THE HARD INCANDESCENT MANTLES. THE ASSESSEE-COMPANY DEVELOPED THE CAPACITY TO MANUFACTURING HARD MANTLES ONLY BECAUSE OF ACQUISITION OF RUNNING PLANT FROM MALTA. THERE IS VERY FEW MANUFACTURER OF HARD MANTLES ACROSS THE GLOBE. HARD MANTLES AND SOFT INCANDESCENT MANTLES ARE WIDELY USED AROUND THE WORLD FOR STREET LIGHTING AND CAMPING PURPOSES. THE ASSESSEE IS EXPORT IN MANTLES TO EUROPE AND GERMANY. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER TOOK A COMPARABLE CASE OF FARGO MANTLE PRODUCTS PRIVATE LTD, (FMPPL FOR SHORT) MALAD WEST MUMBAI, WHICH IS ALSO ENGAGED IN THE BUSINESS OF MANUFACTURER OF GAS MANTLES, NON-RADIO-ACTIVE MANTLES, FLEXIBLE MANTLES, CLIP ON MANTLES, DOUBLE TIE ON FLEXIBLE MANTLE. THE ASSESSING OFFICER COMPARED THE FINANCIAL RESULT OF THE ASSESSEE WITH FMPPL AND CAME TO THE CONCLUSION THAT ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 4 COMPARABLE COMPANY IS SHOWING CONSISTENT LOSS, HOWEVER, THE ASSESSEE HAS SHOWN ABNORMAL PROFIT. THE ASSESSING OFFICER RESTRICTED THE PROFITABILITY @ 8% AND THEREBY RESTRICTED THE DEDUCTION UNDER SECTION 10AA TO THAT EXTENT ONLY OUT OF TOTAL CLAIM OF DEDUCTION OF RS.16.65 CRORES. THE ASSESSING OFFICER WORKED OUT THE DEDUCTION OF RS.1.75 CRORES ONLY AND RESULTANTLY DISALLOWED REMAINING AMOUNT OF RS.14.90 CRORES AND BROUGHT THE SAID DISALLOWANCE TO TAX UNDER THE HEAD OTHER SOURCES . 3. THE ASSESSING OFFICER FURTHER NOTED THAT ASSESSEE HAS NOT ALLOWED THE INTEREST ON CAPITAL CONTRIBUTION OF PARTNER AND REMUNERATION THERETO. THE ASSESSING OFFICER DISALLOWED @ 12% OF INTEREST ON CAPITAL CONTRIBUTION OF THE PARTNER. THE ASSESSING OFFICER WORKED OUT THE DISALLOWANCE OF INTEREST TO CAPITAL CONTRIBUTION OF PARTNER OF RS. 1.79 CRORES. ON APPEAL BEFORE THE LD. CIT(A) BOTH THE DISALLOWANCES WERE DELETED. AGGRIEVED BY THE ORDER OF LD. CIT(A) THE REVENUE HAS FILED PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSION OF SHRI O.P.VAISHNAV, LD. DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR REVENUE AND SHRI S.N.SOPARKAR, SENIOR ADVOCATE ASSISTED BY MS. URVASHI SHODHAN, ADVOCATE FOR THE ASSESSEE AND SH. O. P VAISHNAV LEARNED COMMISSIONER OF INCOME TAX- DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR THE REVENUE. THE GROUND NO.1 RELATES TO DELETING THE ADDITION /DISALLOWANCE DEDUCTION UNDER SECTION 10AA OF THE ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 5 ACT. THE LD. CIT-DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. CIT-DR SUBMITS THAT LD. CIT(A) FAILED TO APPRECIATE A FINDING OF ASSESSING OFFICER IS THAT ASSESSEE HAS SHOWN ABNORMAL PROFIT FOR THE YEAR UNDER CONSIDERATION AND PROFIT OF ASSESSEE WAS LESS BY 13% IN SUBSEQUENT YEAR. THE LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT THERE IS MINOR DIFFERENCE IN THE PRODUCT OF ASSESSEE AND FMPPL. THE MINOR DIFFERENCE WOULD NOT LEAD TO SO MUCH OF DIFFERENCE. THE ASSESSING OFFICER HAS RIGHTLY TAKEN THE INCOME OF ASSESSEE AT RS.14.49 CRORES AS INCOME FROM OTHER SOURCES. THE LD. CIT-DR PRAYED FOR REVERSING THE ORDER OF LD. CIT(A) AND TO RESTORE THE ORDER OF ASSESSING OFFICER. 5. ON THE OTHER HAND, THE LD. SENIOR COUNSEL OF THE ASSESSEE SUBMITS THAT THE ASSESSEE IS ENGAGED MANUFACTURING HARD AND SOFT MANTLE, WHICH ARE WIDELY USED IN EUROPE AND GERMANY FOR STREET LIGHTING. THE ASSESSEE IS HAVING 100% EXPORT ORIENTED UNIT IN SEZ IN SURAT AND PRODUCT OF THE ASSESSEE IS EXPORTED TO EUROPE AND GERMANY. THE ASSESSEE SUPPLIED ITS PRODUCT TO GERMANY GOVERNMENT OR SELF-GOVERNMENT ORGANIZATION. THE ASSESSEE-FIRM ACQUIRED SOLE RUNNING MANUFACTURING UNIT OF PRIME QUALITY OF HARD MANTLE SITUATED IN MALTA. THE HARD MANTLE MANUFACTURED AT THIS PLANT WAS APPROVED FOR THE USE ON STREET LIGHTING IN EUROPE. THE ASSESSEE GOT EXTREMELY ATTRACTIVE OPPORTUNITY IN VIEW OF THE FACT THAT THERE WAS NO MANUFACTURING OF HARD ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 6 MANTLE IN INDIA AND THERE ARE VERY FEW MANUFACTURER AROUND THE WORLD. THUS, THE ASSESSEE-FIRM HAS MONOPOLY IN THE BUSINESS. ON ACQUISITION OF MANUFACTURING UNIT IN MALTA, THE CUSTOMER OF THE ERSTWHILE MANUFACTURING GIVEN APPROVAL OF THE PRODUCT OF THE ASSESSEE. THIS FACT IS EVIDENT BY VARIOUS E-MAIL CORRESPONDENCE BY FALKS VERTAS LTD. WITH ASSESSEE, COPIES OF WHICH ARE PLACED ON RECORD AT PAGES 27-31 OF THE PAPER BOOK. THE LD. SENIOR COUNSEL OF THE ASSESSEE FURTHER SUBMITS THAT THE CORRESPONDENCE BETWEEN THE ASSESSEE AND CUSTOMERS OF FALKS VERITAS LTD. THAT ASSESSEE ACQUIRED RUNNING MANUFACTURING PLANT WITH ALL PREMIUM SEGMENTS CUSTOMER AND IT WAS HAVING MONOPOLY IN BUSINESS. THE ASSESSEE HAS BEEN EARNING GOOD MARGIN PROFIT. THE LD. SENIOR COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION ON PAGES 8-9 OF THE ORDER OF LD. CIT(A) AND POINTED OUT THAT THE ASSESSEE IS SHOWN GP @ 84.29% FROM ASSESSMENT YEAR 2009-10, GP AT 79.39% IN ASSESSMENT YEAR 2010-11, 82.69% IN ASSESSMENT YEAR 2011-12, 84.84% IN ASSESSMENT YEAR 2012-13, 84.01% IN CURRENT YEAR, 71.11% IN SUBSEQUENT YEAR I.E. 2014- 15 AND AGAIN 84.81% IN ASSESSMENT YEAR 2015-16. 6. THE LD. SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY IN ASSESSMENT YEARS 2009-10 TO 2012-13. IN ALL YEARS, THE PROFIT MARGIN OF ASSESSEE HAS BEEN ACCEPTED IN ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. IN ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 7 DOUBTED THE COMMENCEMENT OF MANUFACTURING ACTIVITIES, HOWEVER PROFIT OF ASSESSEE WAS NOT DOUBTED. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) ,WHEREIN THE APPEAL OF THE ASSESSEE WAS ALLOWED AND ON FURTHER BY REVENUE BEFORE TRIBUNAL, THE APPEAL OF REVENUE WAS DISMISSED, COPY OF WHICH IS PLACED ON RECORD. 7. THE LD. SENIOR COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT NO DEFICIENCY WAS POINTED OUT IN THE BOOKS OF ACCOUNT. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED. NO DISCREPANCY WAS POINTED OUT BY AUDITOR. THE LD. SR. COUNSEL OF THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSING OFFICER CAN ONLY TINKERED WITH THE PROFIT OF ASSESSEE BY INVOKING THE PROVISIONS OF SUB-SECTION (9) OF 10AA R.W.S. SECTION 80-IA(10). ADMITTEDLY, THE ASSESSING OFFICER HAS NOT INVOKED THE SAID PROVISIONS. THE LD. SR. COUNSEL OF THE ASSESSEE SUBMITS THAT ONCE SIMILAR PROFIT HAS BEEN ACCEPTED IN ALL PREVIOUS YEAR, THERE WAS NO QUESTION FOR DOUBTING THE PROFIT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER WORKED OUT THE PROFIT OF THE ASSESSEE @ 8% OF THE TURNOVER WITHOUT INVOKING PROVISION OF SUB-SECTION 9 OF 10AA R.W.S. SUB-SECTION 80IA(10). THE ASSESSING OFFICER THEREBY DISALLOWED RS.14.90 CRORES AND TREATED THE SAME ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 8 INCOME FOR OTHER SOURCES. BEFORE US THE LD. SR. COUNSEL OF THE ASSESSEE VEHEMENTLY ARGUED THAT FROM ASSESSMENT YEAR 2009-10 ONWARDS TILL ASSESSMENT YEAR 2015-16 THE ASSESSEE HAS SHOWN CONSISTED PROFIT EXCEPT LITTLE REDUCE IN ASSESSMENT YEAR 2014-15. WE FIND MERIT IN THE SUBMISSION OF LD. SENIOR COUNSEL OF THE ASSESSEE THAT THE ASSESSEE HAS SHOWN SUBSTANTIAL PROFIT IN ALL YEARS AND THE REVENUE HAS NOT DOUBTED SUCH PROFIT EXCEPT IN THE YEAR UNDER CONSIDERATION. WE FURTHER FIND MERIT IN THE SUBMISSION OF LD. SENIOR COUNSEL OF THE ASSESSEE THAT SIMILAR PROFIT ALMOST CONSISTED FOR ABOUT 80% HAD BEEN ACCEPTED FOR ASSESSMENT YEARS 2009-10 TO 2012-13 IN THE ORDER PASSED UNDER SECTION 143(3) AND THE ASSESSEE HAS AGAIN SHOWN SIMILAR PROFIT FOR IN ASSESSMENT YEAR 2015-16. THE COMPARABLE INSTANCES OF FMPPL IS NOT APPLICABLE AS THE ASSESSEE IS HAVING 100% EXPORT ORIENTED UNIT. THE CUSTOMER OF ASSESSEE IS IN EUROPE OR GERMANY. THE FMPPL ONLY MANUFACTURE SOFT MANTLES WHICH ARE COMMONLY USED AS PERTEXMAX IN LIGHTING LAMPS ONLY. AGAIN THERE IS NO STREET GAS LIGHT FOR USE OF SUCH PRODUCT. NEITHER THE PRODUCT OF COMPARABLE NOR END USING OF THE COMPARABLE NOR THE TURNOVER OF THE SAID COMPANY IS COMPARABLE WITH THE ASSESSEE AS NOTED ABOVE, THE PROFIT OF THE ASSESSEE CAN ONLY BE INCURRED BY INVOKING THE PROVISION TO SUB- SECTION 9 OF 10AA R.W.S. 80(IA) ONLY. THEREFORE, WE DO NOT FIND ANY ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 9 INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) WHICH WE AFFIRM. IN THE RESULT, GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED. 9. GROUND NO.2 RELATES TO DELETING THE DISALLOWANCE OF INTEREST OF PARTNER CAPITAL. THE LD. CIT-DR OF THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. 10. ON THE OTHER HAND, LD. SENIOR COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). THE LD. SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT THERE IS NO CLAUSE IN THE PARTNERSHIP DEED WHICH ENTITLES THE ASSESSEE TO PAY INTEREST ON CAPITAL CONTRIBUTION TO THE PARTNERS. THE LD. SENIOR COUNSEL SUBMITS THAT IN FACT THIS GROUND OF APPEAL IS COVERED BY NUMBER OF DECISIONS OF TRIBUNAL AND THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS ALIDHARA TAXSPIN ENGINEERS, TAX APPEAL NO.265 OF 2017 DATED 02.05.2017 AND CIT VS. MACDOWELL AND COMMISSION. LTD. TAX APPEAL NO. 615 AND 617 OF 2006 DATED 11.10.2006. THE LD. SR. COUNSEL OF ASSESSEE SUBMITS THAT LD. CIT(A) WHILE GRANTING RELIEF TO ASSESSEE HAS FOLLOWED THE DECISION OF JURISDICTIONAL HIGH COURT, WHICH ARE SQUARELY APPLICABLE IN THE FACTS OF THE PRESENT CASE. THEREFORE, WE DO NOT FIND NO FAULT IN ORDER OF LD. CIT(A). 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND PERUSED MATERIALS CAREFULLY. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT CLAIMED INTEREST ON CAPITAL CONTRIBUTION AND ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 10 REMUNERATION TO THE PARTNERS. THE ASSESSEE DERIVED INCOME FROM MANUFACTURING UNIT AND CLAIMED DEDUCTION UNDER SECTION 10AA OF THE ACT. THE ASSESSING OFFICER HELD THAT NON CAPITAL CHARGE OF INTEREST AND NONPAYMENT OF REMUNERATION FOR WORKING PARTNER HAS BEEN DONE TO ENHANCE THE PROFIT OF ASSESSEE-FIRM WHICH IS EXEMPT FROM TAXATION AND TO REDUCE THE TAXABLE INCOME OF INDIVIDUAL PARTNER TO THAT EXTENT. THE ASSESSING OFFICER ALSO HELD THAT THE PARTNERSHIP DEED IS A VEHICLE OF COLLUSIVE TAX AVOIDING ACTION. THE ASSESSING OFFICER WORKED OUT THE INTEREST OF CAPITAL CONTRIBUTION OF THE PARTNER @ 12% AND THEREBY DISALLOWED 1.79 CRORES AND EXCLUDED FROM THE DEDUCTION UNDER SECTION 10AA OF THE ACT. BEFORE LD. CIT(A) THE ASSESSEE MADE SIMILAR SUBMISSION AS MADE BEFORE US. THE LD. CIT(A) HELD THAT ASSESSING OFFICER MAINLY RELIED UPON THE DECISION OF TRIBUNAL IN THE CASE OF ACIT VS. MERIDIAN IMPEX (37 TAXMANN.COM 22 (2013) ITAT, RAJKOT BENCH), WHEREIN THE SUPPLEMENTARY DEED WAS MADE FOR AMOUNTING THE LOSS FOR NON-PAYMENT OF INTEREST ON CAPITAL AND REMUNERATION TO THE PARTNER. HOWEVER, IN THE PRESENT CASE, THERE IS NO SUCH LOSS IN THE PARTNERSHIP DEED FOR PAYMENTS PERTAINING TO INTEREST AND REMUNERATION TO THE PARTNERS. THE LD. CIT(A) ALSO REFERRED AND RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT ALIDHARA TAXSPIN ENGINEERS (SUPRA), IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT MERE INCORPORATION OF INTEREST ON PARTNER CAPITAL ITA NO.63/SRT/2018 (A.Y.2013-14) M/S INDO AUERLICHIT MANUFACTURING CO. 11 ACCOUNT REMUNERATION DOES NOT SIGNIFY THAT THEY ARE MANDATORY IN NATURE. WE FIND THAT THE CASE OF ASSESSEE IS ON BETTER FOOTING AS THERE IS NO SUCH CLAUSE IN THE PARTNERSHIP DEED ITSELF. THE ASSESSEE HAS NOT CHARGED ANY CHARGE OF REMUNERATION TO THE PARTNERS AND ACCORDINGLY, ASSESSEE CANNOT BE COMPARED TO CHARGE / INTEREST OR REMUNERATION TO THE PARTNER. IN VIEW OF THE ABOVE DISCUSSION, WE DO FIND ANY INFIRMITY IN THE ORDER PASSED BY LD. CIT(A), WHICH WE AFFIRM. IN THE RESULT, THIS SECOND GROUND OF REVENUE IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER ANNOUNCED 04/08/ 2021 BY PLACING RESULT ON NOTICE BOARD AS PER RULE 34(5) OF INCOME TAX (APPELLATE TRI) RULE, 1963. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED:04/08/2021 DKP. SR.P.S. O.S COPY TO: 1. APPELLANT-ACIT, CIR-1(2), ROOM NO.213, 2 ND FLOOR, AYAKAR BHAVAN, MAJURAGATE SURAT-395001 2. RESPONDENT- M/S INDO AUERLICHIT MANUFACTURING CO. PLOT NO.30&31, SURAT SPECIAL ECONOMIC ZONE, SACHIN,SURAT-394230 3. CIT(A)-2, SURAT 4. CIT 5. DR 6. GUARD FILE TRUE COPY/ BY ORDER ASSISTANT REGISTRAR, ITAT, SURAT