M/s A.S.A & Co, Hooghly V. I.T.O Wd - 1(2),kolkata, Hooghly

ITA 655/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1696 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 23-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 25-03-2013
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 143(3); 133A; 234B; 131; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH, KOLKATA (BENCH C) BEFORE SHRI ABY. T. VARKEY, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 ORDER PER M. BALAGANESH , AM THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA VIDE APPEAL NO.464/CIT(A)-XXXVI/KOL/WD.-1(2), HG./10-11 DATED 24.01.2013 AGAINST THE ORDER OF THE ASSESSMENT FRAMED BY INCOME TAX OFFICER, WARD 1(2), HOOGHLY UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 30.12.2010. 2. THE GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. M/S. A.S.A & CO. [PAN : AAJFM1599F] -VS- I.T.O. WARD 1(2), HOOGHLY (APPELLANT) (RESPONDENT) FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT NONE DATE OF HEARING 23.05.2017 DATE OF PRONOUNCEMENT 07.06.2017 2 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE IN THE SUM OF RS 34,20,000/- TOWARDS ALLEGED DIFFERENCE IN INVESTMENT IN PARTNERSHIP FIRM M/S NATURE VIEW RESTAURANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE TRADING OF BUILDING MATERIALS. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 23.8.2007 ALONG WITH OTHER TWO BUSINESS PREMISES OWNED BY THE PARTNERS OF THE ASSESSEE FIRM. DURING THE SURVEY OPERATIONS AND AFTERWARDS, THE PARTNERS WERE EXAMINED ON OATH AND THEY STATED THEY DO NOT MAINTAIN ANY BOOKS OF ACCOUNTS AND DISCLOSED RS 25 LACS AS UNDISCLOSED INVESTMENT MADE IN THE HOTEL NAMELY NATURE VIEW HOTEL. THE LD AO OBSERVED THAT EVEN THE BILLS AND VOUCHERS WERE NOT PRODUCED DURING THE SURVEY OPERATION. THE LD AO OBSERVED THAT ASSESSEE HAD MADE FRESH INVESTMENT DURING THE FY 2007-08 IN NATURE VIEW HOTEL AMOUNTING TO RS 51,75,000/- AS PER DOCUMENT RECEIVED FROM ITO WARD 1(3), HOOGHLY, WHERE THE CLOSING BALANCE OF INVESTMENT MADE WAS REFLECTED AT RS 69,79,093/-. THE LD AO OBSERVED THAT AFTER MUCH DELAY, THE ASSESSEE FIRM PRODUCED ITS AUDITED ACCOUNTS ON 22.12.2010 . THE LD AO OBSERVED THAT IN THE BALANCE SHEET OF THE ASSESSEE FIRM IT WAS NOTICED THAT THE ASSESSEE HAD SHOWN INVESTMENT MADE IN THE SAID HOTEL AMOUNTING TO RS 35,59,093/-. THE LD AO BASED ON THE DOCUMENT RECEIVED FROM THE ITO OF NATURE VIEW HOTEL CONCLUDED THAT THE ASSESSEE FIRM HAD MADE UNDISCLOSED INVESTMENT IN THE NATURE VIEW HOTEL TO THE TUNE OF RS 34,20,000/- ( 69,79,093 35,59,093) AS AMOUNTS INVESTED OUTSIDE THE BOOKS OF THE ASSESSEE FIRM. THIS ADDITION WAS FURTHER CORROBORATED WITH THE DISCLOSURE MADE BY THE ASSESSEE AT THE TIME OF SURVEY TO THE TUNE OF RS 25 LACS TOWARDS UNDISCLOSED INVESTMENT IN NATURE VIEW HOTEL. 3 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. 3.2. BEFORE THE LD CITA, IT WAS POINTED OUT THAT EVEN IN THE ASSESSMENT OF PARTNERSHIP FIRM M/S NATURE VIEW RESTAURANT FOR THE ASST YEAR 2008-09 COMPLETED U/S 143(3) OF THE ACT, NO SUCH DISCREPANCY WAS FOUNDED AND NO ADDITION WAS MADE IN THIS RESPECT. THE ASSESSEE SUBMITTED THE AUDITED BALANCE SHEET OF ASSESSEE FIRM FOR THE FINANCIAL YEAR 2007-08 RELEVANT TO ASST YEAR 2008-09. SIMILARLY IT FILED THE AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.3.2008 OF M/S NATURE VIEW RESTAURANT TOGETHER WITH THE COPY OF ASSESSMENT ORDER U/S 143(3) OF THE ACT FRAMED ON NATURE VIEW RESTAURANT FOR ASST YEAR 2008-09. THE LD CITA OBSERVED THAT ASSESSEE IS PARTNER IN NATURE VIEW RESTAURANT ALONGWITH OTHERS M/S DUTTA TRADING CO., ARUN KUMAR DATTA, SUBHAL CHANDRA DATTA. ARUN KUMAR DATTA AND SUBHAL CHANDRA DATTA ARE PARTNERS IN ASSESSEE FIRM AND DUTTA TRADING CO., AND HENCE ASA & CO (ASSESSEE FIRM) , DUTTA TRADING CO. AND NATURE VIEW RESTAURANT ARE CLOSE FAMILY CONCERNS. THE LD CITA OBSERVED THAT THE DOCUMENT RECEIVED FROM ITO OF NATURE VIEW RESTAURANT IS THE BALANCE SHEET OF NATURE VIEW RESTAURANT AS ON 31.3.2008 WHEREIN PARTNERS CONTRIBUTION HAD BEEN REFLECTED AT A HIGHER FIGURE BY RS 34,20,000/-. HE OBSERVED THAT THE BALANCE SHEET OF NATURE VIEW RESTAURANT AND ASSESSEE FIRM HAS BEEN SIGNED BY MR ARUN KUMAR DUTTA (COMMON PARTNER). MOREOVER, ARUN KUMAR DUTTA AND SUBHAL CHANDRA DUTTA HAD DECLARED A SUM OF RS 25,00,000/- EACH AS UNDISCLOSED INVESTMENT IN NATURE VIEW RESTAURANT. BASED ON THESE OBSERVATIONS, HE UPHELD THE ADDITION MADE BY THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 2. FOR THAT THE LD. CIT(A) XXXVI/KOL IS ERRED IN CONFIRMING THE ADDITION AMOUNT OF RS.34,20,000/- TOWARDS ALLEGED DIFFERENCE IN INVESTMENT IN ITS PARTNERSHIP FIRM M/S NATURE VIEW RESTAURANT WITHOUT CONSIDERING AND 4 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. APPRECIATING THE FACTUAL POSITION AND ALSO WITHOUT BRINGING IN ANY MATERIAL OR EVIDENCE ON RECORD TO ARRIVE AT THE SAID FINDINGS. 3.3. THE LD AR ARGUED THAT ADMITTEDLY THE AMOUNTS WERE FOUND CREDITED ONLY IN THE BOOKS OF M/S NATURE VIEW RESTAURANT TOWARDS PARTNERS CONTRIBUTION. HENCE IN ALL FAIRNESS , ANY ADDITION THAT IS MADE TOWARDS DISCREPANCY IN FIGURES , SHOULD HAVE BEEN MADE ONLY IN THE HANDS OF M/S NATURE VIEW RESTAURANT U/S 68 OF THE ACT. IT CANNOT BY ANY MEANS CONSIDERED IN THE HANDS OF THE PARTNER I/E THE ASSESSEE FIRM AS UNEXPLAINED INVESTMENT. APART FROM THIS, THE LD AR ARGUED THAT STATEMENT GIVEN DURING SURVEY HAS GOT NO EVIDENTIARY VALUE. THERE IS ABSOLUTELY NO CORROBORATING EVIDENCE THAT WAS FOUND DURING THE SURVEY OPERATION OR ANY EVIDENCE THAT HAS BEEN BROUGHT ON RECORD BY THE LD AO IN THE ASSESSMENT PROCEEDINGS EXCEPT MERELY PLACING RELIANCE ON THE DOCUMENT RECEIVED FROM ITO OF NATURE VIEW RESTAURANT. NONE APPEARED ON BEHALF OF THE REVENUE. NO LETTER OF ADJOURNMENT WAS FILED BY THE LD DR BEFORE US. HENCE WE PROCEED TO HEAR THE LD AR AND DISPOSE OF THE APPEAL AS ALL THE FACTS ARE AVAILABLE ON RECORD. 3.4. WE HAVE HEARD THE LD AR AND PERUSED THE PAPER BOOK OF THE LD AR CONTAINING THE FINANCIAL STATEMENTS OF THE ASSESSEE AS ON 31.3.2008 (ENCLOSED VIDE PAGES 2 TO 3 OF PAPER BOOK) ; NOTING OF LD AO IN SURVEY AND SURVEY REPORT (ENCLOSED VIDE PAGES 4 TO 5 OF PAPER BOOK) ; STATEMENT OF SRI A DUTTA IN SURVEY (ENCLOSED VIDE PAGES 6 TO 7 OF PAPER BOOK) ; STATEMENT OF SRI S DUTTA IN SURVEY (ENCLOSED VIDE PAGES 8 TO 12 OF PAPER BOOK); STATEMENT OF SRI S DUTTA IN ASSESSMENT PROCEEDINGS (ENCLOSED VIDE PAGES 13 TO 16 OF PAPER BOOK) ; DOCUMENTS RECEIVED FROM ITO OF NATURE VIEW RESTAURANT (ENCLOSED VIDE PAGES 17 TO 22 OF PAPER BOOK) ; PARTNERSHIP DEED OF A.S.A. & CO (ENCLOSED VIDE PAGES 23 TO 28 OF PAPER BOOK) AND ASSESSMENT ORDER U/S 143(3) OF NATURE VIEW RESTAURANT FOR ASST YEAR 2008- 09 (ENCLOSED VIDE PAGES 29 TO 35 OF PAPER BOOK). FOR THE SAKE OF CONVENIENCE, 5 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. THE RELEVANT OPERATIVE PORTION OF DISCLOSURE STATEMENT (WHICH IS RELIED HEAVILY BY THE REVENUE) IS REPRODUCED HEREINBELOW FROM STATEMENT OF SRI A DUTTA ON 24.8.2007 TAKEN DURING SURVEY:- Q. YOU HAVE ALREADY STATED IN THE DEPOSITION UNDER OATH ON 23.08.2007, THAT YOU HAVE INVESTED ABOUT RS 50 LAKHS IN NATURE VIEW HOTEL. DO YOU ACCEPT THIS? A. YES, I ACCEPT THAT I HAVE DISCLOSED RS 50 LAKHS ON 23.08.2007 AND I ON BEHALF OF ALL THE PARTNERS OF M/S A.S.A. & CO & M/S DUTTA TRADING CO. ARE READY TO PAY THE TAX LIABILITY FOR THIS DISCLOSURE OF RS 50 LAKHS FOR THE FY 2007-08. Q. PLEASE DETAIL THE MODALITIES OF PAYMENT OF TAXES AGAINST THIS RS 50 LAKHS DISCLOSURE? A. SIR, I AND OTHER PARTNERS WOULD DISCUSS THIS MATTER WITH OUR TAX CONSULTANT AND GIVE A WRITTEN BREAKUP AND POST DATED CHEQUES BY 7 TH SEPT 2007. Q. ON WHAT BASIS DO YOU SAY THAT RS 50 LAKHS IS YOUR INVESTMENT IN NATURE VIEW HOTEL? A. THE ACCUMULATED FUNDS ARE FROM M/S DUTTA TRADING CO. & M/S A.S.A & CO EACH HAVING UNDISCLOSED INCOME OF RS 25 LAKHS. WE WOULD DISCLOSE THE AMOUNTS IN THE AY 08-09. 3.4.1. WE FIND IT RELEVANT TO REPRODUCE THE RELEVANT PORTIONS OF THE STATEMENT RECORDED U/S 131 OF THE ACT FROM SRI SUBHAL DUTTA , PARTNER OF A.S.A. & CO (ASSESSEE FIRM) AND M/S DUTTA TRADING CO. ON 3.9.2007 :- 4. YOU ARE YET TO FILE THE MODALITIES OF PAYMENT OF TAXES AGAINST THE DISCLOSURE? 6 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. A. I ALSO ACCEPT THAT MY PARTNER SRI ARUN DUTTA DISCLOSED RS 50 LAKHS ON 23/08/07 WITH AND AFTER CONSULTATION WITH ME AND OTHER PARTNERS OF THE FIRMS. THE FIRST INSTALMENT MAY BE ADJUSTED WITH OUR DUE REFUNDS TO THE EXTENT AS AVAILABLE FOR THE CURRENT FINANCIAL YEAR. THE NEXT OF THE BREAK UP WOULD BE SUBMITTED BY 07/09/07. 5. YOUR PARTNER SRI ARUN DUTTA STATED THAT, YOU HAVE SUPPRESSED INCOME IN ASA & CO., DUTTA TRADING CO. BY INFLATING THE EXPENSES AND THEN PLOUGHED BACK THIS AMOUNT OF MONEY IN PURCHASE OF LAND, CONSTRUCTION OF THE BUILDING AND WORKING CAPITAL OF M/S NATURE VIEW HOTEL. A. YES SIR. I ADMIT THAT THE AMOUNT WITH WHICH THE BUILDING OF NATURE VIEW HOTEL WAS CONSTRUCTED WAS FROM ASA & CO. & DUTTA TRADINGS INCOME. 3.4.2. WE ALSO FIND IT PERTINENT TO REPRODUCE THE RELEVANT PORTIONS OF THE STATEMENT RECORDED FROM SRI SUBHAL CHANDRA DUTTA, PARTNER OF A.S.A.& CO ON 28.12.2010 AS UNDER:- Q 6. PLEASE SPECIFY YEARWISE INVESTMENT MADE BY ASA&CO IN NATURE VIEW HOTEL? A. I AM UNABLE TO REPLY SUCH QUESTION AS IT IS NOT KNOWN TO ME. Q 7. IN THE DEPOSITION TAKEN DURING THE SURVEY OPERATION AND AFTERWARD YOU AND YOUR ANOTHER PARTNER DISCLOSED 25 LAKHS AS INVESTMENT MADE IN THE NATURE VIEW HOTEL OUT OF UNDISCLOSED FUND. WHAT DO YOU COMMENT ON IT. 7 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. A. I CANNOT RECOLLECT THE SAME AS IT IS A MATTER OF LONG PERIOD. MOREOVER DURING THE TIME OF SURVEY OPERATION WE WERE SO TENSED . WE HAVE FORGOTTEN WHAT WE STATED AT THAT TIME. Q 8. IT IS SEEN FROM THE DOCUMENTS RECEIVED FROM I.T.O. WARD -1(3) HOOGHLY THAT THE FIRM ASA & COMPANY INVESTED DURING THE YEAR RS 51,75,000/- . AS PER THE BALANCE SHEET SUBMITTED BY YOU THE CLOSING BALANCE OF INVESTMENT MADE IN NATURE VIEW HOTEL WAS RS 35,59,093/- ONLY WHEREAS THE CLOSING BALANCE AS PER STATEMENT FILED BEFORE THE I.T.O. WD. 1(3) THE SAME IS RS 69,79,093/-. WHAT IS THE REASON BEHIND IT? A. I AM UNABLE TO RECONCILE OR CAN THROW ANY LIGHT ON IT. 3.4.3. FROM THE AFORESAID STATEMENTS, WHAT TRANSPIRES IS ONLY THE PARTNERS IN THEIR INDIVIDUAL CAPACITY HAD MADE THE DISCLOSURE AT THE TIME OF SURVEY AND THEREAFTER. THEY HAVE NEVER SAID THAT THE ASSESSEE FIRM HAD MADE INVESTMENT OF RS 25 LACS IN NATURE VIEW RESTAURANT. INFACT THE PARTNERS HAD EVEN MENTIONED THE MODUS OPERANDI OF GENERATION OF UNDISCLOSED INCOME OF RS 50 LACS BY STATING THAT THE SAME HAS BEEN GENERATED FROM ASA & CO AND DUTTA TRADING CO. BUSINESSES. THERE IS NO EVIDENCE TO THE FACT AS TO HOW MUCH WAS GENERATED FROM ASA & CO AND FROM DUTTA TRADING CO. WE FIND THAT THE LD AO HAD MADE ADDITION ONLY ON ACCOUNT OF UNEXPLAINED INVESTMENT IN NATURE VIEW RESTAURANT IN THE INSTANT CASE. HENCE WE CONFINE OUR OPINION ONLY ON THE POINT WHETHER AN ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE TOWARDS UNDISCLOSED INVESTMENT IN NATURE VIEW RESTAURANT. IN OUR CONSIDERED OPINION, THE EXCESS AMOUNT OF RS 34,20,000/- , BEING THE DIFFERENCE IN CAPITAL ACCOUNT, AS REFLECTED IN NATURE VIEW RESTAURANT VIS A VIS INVESTMENT REFLECTED IN ASSESSEE FIRMS BOOKS, IS FOUND CREDITED ONLY IN THE BOOKS OF NATURE VIEW RESTAURANT. HENCE IF AT ALL ANY ADDITION THAT COULD BE MADE, 8 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. THE SAME COULD BE MADE IN THE HANDS OF NATURE VIEW RESTAURANT U/S 68 OF THE ACT. ALTERNATIVELY, IT COULD ALSO BE MADE IN THE HANDS OF THE RESPECTIVE PARTNERS WHO HAD DEPOSED THAT THE UNDISCLOSED INCOME HAS BEEN GENERATED FROM TWO PARTNERSHIP BUSINESSES AND THE SAME HAS BEEN PLOUGHED BACK BY THEM AS INVESTMENT IN NATURE VIEW RESTAURANT. THERE IS ABSOLUTELY NO CASE FOR MAKING AN ADDITION IN THE CASE OF THE ASSESSEE FIRM IN THE INSTANT CASE. HENCE WE HAVE NO HESITATION IN DELETING THE ADDITION OF RS 34,20,000/- MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED. 4. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF PARTNERS REMUNERATION IN THE SUM OF RS 1,578,735/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE PARTNERSHIP DEED OF THE ASSESSEE FIRM DID NOT SPECIFY THE QUANTUM OF REMUNERATION THAT COULD BE PAID TO PARTNERS AND ACCORDINGLY DISALLOWED THE SAME AS NOT IN ACCORDANCE WITH SECTION 40B(V) OF THE ACT AND DISALLOWED RS 1,57,735/- IN THE ASSESSMENT BY PLACING RELIANCE ON THE CBDT CIRCULAR NO. 739 DATED 25.3.1996. 4.2. IT WAS STATED BEFORE THE LD CITA THAT THE ACTION OF THE LD AO IN DISALLOWING THE PARTNERS REMUNERATION ON THE GROUND THAT QUANTUM IS NOT SPECIFIED IN THE PARTNERSHIP DEED WAS NOT CORRECT IN VIEW OF THE SUBSEQUENT CLARIFICATION BY THE BOARD STATING THAT WHERE THE MANNER OF QUANTIFYING SUCH REMUNERATION IS GIVEN IN THE PARTNERSHIP DEED, THEN SUCH REMUNERATION SHALL NOT BE DISALLOWED. IT WAS STATED THAT THE MANNER OF CALCULATION OF REMUNERATION WAS DULY PRESCRIBED IN THE PARTNERSHIP DEED WHEREIN IT IS SPECIFICALLY STATED THAT THE REMUNERATION TO WORKING PARTNERS SHALL BE CALCULATED AT PERCENTAGE OF INCOME OF EACH ACCOUNTING PERIODS 9 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. ALLOWABLE UNDER THE PROVISIONS OF SECTION 40B(V) OF THE INCOME TAX ACT,1961. IT WAS ALSO SUBMITTED THAT NO ADDITION ON THIS ACCOUNT WAS MADE IN THE EARLIER YEARS EVENTHOUGH ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE ACT. THE LD CITA WITHOUT GIVING ANY FINDINGS IN THIS REGARD SIMPLY UPHELD THE DISALLOWANCE MADE BY THE LD AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- 3. FOR THAT THE LD. CIT(A)-XXXVI/KOL IS ERRED IN CONFIRMING THE ASSESSING OFFICERS ACTION IN ADDITION OF RS.1,57,735/- PAID AS PARTNERS SALARY IS COMPLETE CONTRAVENTION OF THE PROVISIONS OF THE ACT AND THEREFORE IS BAD AND ILLEGAL AND SUCH ADDITION SHOULD NOT BE MADE. 4.3. WE HAVE HEARD THE LD AR. WE FIND THAT THE PARTNERSHIP DEED CONTAIN THE FOLLOWING CLAUSE ON PARTNERS REMUNERATION WHICH IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE:- CLAUSE 9 . THE WORKING PARTNERS OF THE FIRM WOULD BE PAID REMUNERATION WITHIN THE OVERALL CEILING FIXED U/S 40(B) OF THE INCOME TAX ACT, 1961 INCLUDING ANY STATUTORY MODIFICATION FROM TIME TO TIME. THE AMOUNT OF REMUNERATION TO BE PAID TO THE WORKING PARTNERS EACH YEAR SHALL BE FIXED WITH REFERENCE TO THE BOOK PROFITS OF THE FIRM AS DEFINED IN EXPLANATION 3 TO SECTION 40(B) OF THE SAID ACT AND THE ENTITLEMENT OF EACH PARTNER FOR SUCH REMUNERATION SHALL BE IN THE FOLLOWING PROPORTIONS: SRI AJIT MITRA 15% SRI SUBHAL CHANDRA DUTTA 35% SRI ARUN DUTTA 50% HOWEVER, THE AMOUNT OF REMUNERATION PAYABLE TO EACH PARTNERS AS STATED HEREINABOVE MAY BE CHANGE HAVING REGARDS TO THE LIMIT AND EFFORTS PUT IN BY EACH OF THEM IN CONDUCT OF THE BUSINESS AFFAIRS OF THE FIRMS THROUGH A RESOLUTION PASSED AND SIGNED BY ALL THE PARTNERS. IN THIS REGARD, THE RELIANCE PLACED BY THE LD AR ON THE DECISION OF AGRA TRIBUNAL IN ITA NOS. 434,435 & 436/AGR/2012 DATED 28.6.2013 IS WELL FOUNDED WHEREIN IT WAS HELD THAT THE CIRCULAR NO. 739 DATED 25.3.1996 WOULD BE APPLICABLE WHERE NEITHER THE AMOUNT HAS BEEN QUANTIFIED NOR THE LIMIT OF TOTAL REMUNERATION HAS BEEN 10 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. SPECIFIED IN THE DEED, BUT THE SAME HAS BEEN LEFT TO BE DETERMINED BY THE PARTNERS AT THE END OF THE ACCOUNTING YEAR. ONLY IN SUCH CASES, THE PAYMENT OF REMUNERATION CANNOT BE ALLOWED AS DEDUCTION. IT FURTHER HELD THAT WHEN THE MANNER OF COMPUTATION OF REMUNERATION IS PROVIDED IN THE PARTNERSHIP DEED AND THE SAME IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 40(B) OF THE INCOME TAX ACT, THEN NO DISALLOWANCE OF REMUNERATION COULD BE MADE. IN THE INSTANT CASE, AS STATED SUPRA, THE PARTNERSHIP DEED CLEARLY MENTIONS THE MANNER OF COMPUTATION OF REMUNERATION. HENCE RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE SAID DECISION, WE DIRECT THE LD AO TO ALLOW DEDUCTION TOWARDS PARTNERS REMUNERATION IN THE SUM OF RS 1,57,735/-. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE ASSESSEE IS ALLOWED. 5. THE GROUND NO. 4 RAISED BY THE ASSESSEE IS WITH REGARD TO CHARGEABILITY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT WHICH IS ONLY CONSEQUENTIAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 07.06.2017. SD/- SD/- [ABY. T. VARKEY] [M. BALAGANESH] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.06.2017 {RS SPS} 11 I.T.A. NO.655/KOL/2013 ASSESSMENT YEAR 2008-09 M/S. A.S.A & CO. COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE M/S ASA & CO., C/O SUBAL CH. DUTTA, 9/24/6, SARAT SARANI, 1 ST LANE, P.O.- MOREPUKUR (SAHA PARA), RISHRA, DIST.-HOOGHLY-712250. 2. REVENUE/RESPONDENT-I.T.O. WARD 1(2), HOOGHLY 3. CIT(A)- KOLKATA 4. CIT , KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKATA BENCHES, KOLKATA.