M/s Nihalchand Balaram, Ujjain V. Assistant Commissioner of Income Tax 2 (1) , Ujjain

ITA 711/Ind/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5929 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-09-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 17-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINITA DUBEY
• Section: 143(3); 40(b)

Judgement Text

[ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH (SMC), INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.711/IND/2017 ASSESSMENT YEAR: 2008-09 NIHALCHAND BALARAM 257, JAWAHAR MARG KHACHROD DIST. UJJAIN / VS. ACIT - 2(1) UJJAIN ( APPELLANT ) ( REVENUE ) P.A. NO. AACFN0685Q APPELLANT BY SHRI PANKAJ SHAH, A.R. RESPONDENT BY SMT. VINITA DUBEY, SR. D.R. DATE OF HEARING: 26.09.2019 DATE OF PRONOUNCEMENT: 27.09.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A), UJJAIN DATED 4.8.2017 PERTAINING TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 2 [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 3 2. GROUND NOS.1 & 2 OF THE ASSESSEES APPEAL ARE AGAINST DISALLOWANCE OF REMUNERATION PAID TO THE PARTNER. THE FACTS GIVING RISE TO THIS GROUND ARE THAT THE A.O. WHI LE FRAMING ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) DISALLOWED THE E XCESS REMUNERATION CLAIMED OF RS.3,53,579/-. 3. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). LD. CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS CONFIRMED THE DISALLOWANCE. 4. AGGRIEVED AGAINST THIS, THE ASSESSEE IS IN PRESENT APPEAL. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE ADD ITIONS AND CONFIRMED THE SAME. HE SUBMITTED THAT INITIALLY PARTNERSHIP WAS CONSTITUTED AND IT WAS ENVISAGED IN TH E PARTNERSHIP DEED DATED 1.4.1995 THAT AS PER CLAUSE 8 REMUNERATION WILL BE CALCULATED IN ACCORDANCE WITH THE INCOME TAX ACT. THEREAFTER, THE PARTNERSHIP WAS [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 4 RECONSTITUTED VIDE DEED OF PARTNERSHIP DATED 20.8.200 7, WHEREBY THE REMUNERATION OF THE WORKING PARTNERS WAS FIXED AT RS.96,000/-. IT IS CONTENDED THAT REMUNERATI ON COULD BE MODIFIED BY WAY OF MUTUAL CONSENT DATED 21.8.2007 IT WAS AGREED THAT EACH PARTNER WOULD GET 33 1/3 AS REMUNERATION IS TO BE PAID IN ACCORDANCE WITH SECTION 40(B) OF THE ACT. HOWEVER, THE A.O. BY COM PUTING THE DISALLOWANCE ADOPTED THE REMUNERATION ALLOWABLE @ RS.96,000/- WITHOUT CONSIDERING THE SUBMISSION THAT THE REMUNERATION IS REVISED BY MUTUAL CONSENT. LD. COUNS EL SUBMITTED THAT COPY OF MUTUAL CONSENT WAS DULY PLACED BEFORE THE LD. CIT(A), WHO ALSO DID NOT INTERFERE WI TH THE FINDING OF THE LD. CIT(A). 5. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUBMITTED THAT THE ASSESSEE HAD NOT FILED COPY OF MUTUAL CONSENT BEFORE THE A.O. THEREFORE, THE A.O. IS JUSTIFIED IN ADOPTING FIXED REMUNERATION. [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 5 6. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. LD. COUNSEL HAS DRAWN OUR ATTENTION TO THE MUTUAL CONSENT DATED 21.8.2007 ENCLOS ED IN THE PAPER BOOK AT PAGE NOS.14 TO 15. THE REVENUE H AS NOT REBUTTED THE FACT THAT THE MUTUAL CONSENT WAS PLACED BEFORE THE LD. CIT(A). I FIND THAT ONE OF THE CLAUS E OF THE PARTNERSHIP DEED AUTHORISES THE PARTNERS TO REVISE REMUNERATION BY WAY OF MUTUAL CONSENT. THEREFORE, I DIRECT THE A.O. TO ALLOW THE REMUNERATION AS PER THE MUTUAL CONSENT EXECUTED BY THE PARTNERS. THESE GROUNDS OF THE ASSESSEES APPEAL ARE ALLOWED IN TERMS INDICATED ABOVE. 7. GROUND NO.3 IS AGAINST DISALLOWANCE OF ELECTRICITY EXPENSES. APROPOS TO THIS GROUND, LD. COUNSEL OF T HE ASSESSEE CONTENDED THAT AN AMOUNT OF RS.13,283/- WAS PAID ON 19.4.2007 FOR THE ELECTRICITY BILL FOR THE M ONTH OF MAR07. THE PAYMENT WAS MADE LATE BECAUSE THE ELECTRIC ITY [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 6 BILL WAS GENERATED LATE BY THE ELECTRICITY COMPANY. I T IS FURTHER CONTENDED THAT THE EXPENDITURE RELATED TO ELE CTRICITY IS CLAIMED ONLY FOR 12 MONTHS. HE SUBMITTED THAT THE A.O. OUGHT TO HAVE ALLOWED THIS EXPENDITURE. 8. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NOTHING ON RECOR D SUGGESTING THAT THE EXPENDITURE WAS CLAIMED DOUBLY. T HE LIABILITY RELATES TO MAR07, THEREFORE, THE A.O. OUGHT TO HAVE ALLOWED THE EXPENDITURE. I THEREFORE, DIRECT THE A. O. TO DELETE THIS ADDITION. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.711/IND/2017 FOR THE A.Y. 2008-09 IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON27 .09.201 9. SD/ - (KUL BHARAT) JUDICIALMEMBER INDORE; DATED : 27/09/2019 VG/SPS [ITA NO.711/IND/2017] [NIHALCHAND BALARAM, UJJAIN] 7 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, ITAT, INDORE