SWASTIKA AUTOMOBILES, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 852/JPR/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5936 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 16-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI J DHK
• Section: 271(1)(c); 40(b)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES SMC, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JUDICIA L MEMBER VK;DJ VIHY LA-@ ITA NO. 852/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 M/S. SWASTIK AUTOMOBILES KHETAN BHAWAN, M.I. ROAD JAIPUR 302 001 CUKE VS. THE ITO WARD- 2(2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABKFS 1099 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY :NONE JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16/09/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 19/09/2019 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25-08-2017 OF LD. CIT(A)-1, JAIPUR FOR THE ASSESSMENT YEAR 2013- 14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DISALLOWING THE REMUNER ATION PAID TO PARTNERS AS PER NEW PROVISION OF SECTION 40(B)(V) O F RS. 2,23,516/- AND ALLOWING THE REMUNERATION AS PER OLD PROVISION OF SECTION 40(B)(V) OF THE INCOME TAX ACT. 2 ITA NO.852/JP/2017 M/S. SWASTIK AUTOMOBILES VS ITO, WARD- 2(2), JAIPU R 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) HAS ERRED IN NOT DROPPING THE PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT. 2.1 NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN TH IS APPEAL WAS CALLED FOR HEARING. THEREFORE, THE APPEAL OF THE ASSESSEE IS H EARD AND DISPOSED OFF EX-PARTE. 2.2 I HAVE HEARD THE LD. DR AND CAREFULLY PERUSED T HE IMPUGNED ORDERS. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE APPEAL IS REGAR DING CLAIM OF REMUNERATION PAID TO THE PARTNERS OF RS. 6.50 LACS WHICH WAS RESTRICT ED TO RS. 4,26,484/- BY THE AO BY INVOKING THE PROVISIONS OF SECTION 40(B)(V) OF THE ACT AND THUS MADE ADDITION OF RS. 2,23,516/-. 2.2.1 THE ASSESSEE CHALLENGED THE SAID ACTION OF TH E AO BEFORE THE LD. CIT(A) AND CONTENDED THAT PARTNERSHIP DEED EXECUTED ON 16-06-2 009 PROVIDES THE PAYMENT OF REMUNERATION TO THE PARTNERS AND THE PROVISIONS OF SECTION 40(B)(V) AT THE TIME OF EXECUTION OF PARTNERSHIP DEED ARE APPLICABLE AND NO T THE AMENDED PROVISIONS OF SECTION 40(B)(V). THE ONLY OBJECTION OF THE ASSESSE E AGAINST THE DISALLOWANCE MADE BY THE AO IS THAT UNAMENDED PROVISIONS OF SECTION 4 0(B) OF THE ACT ARE APPLICABLE IN THE CASE OF THE ASSESSEE AND NOT THE AMENDED PRO VISIONS. THE LD. CIT(A) HAS CONSIDERED THIS CONTENTION OF THE ASSESSEE AND DEC IDED THE ISSUE IN PARA 3.1.2 AS UNDER:- 3.1.2.DETERMINATION: (I) THE BRIEF FACTS OF THE CASE ARE THAT THE APPELL ANT IS A PARTNERSHIP FIRM AND FOR THE YEAR UNDER CONSIDERATI ON, IT HAS 3 ITA NO.852/JP/2017 M/S. SWASTIK AUTOMOBILES VS ITO, WARD- 2(2), JAIPU R CLAIMED A SUM OF RS. 6.50 ACS ON ACCOUNT OF REMUNER ATION TO PARTNERS WHICH WAS RESTRICTED TO RS. 4,26,484/- BY THE AO IN VIEW OF THE PARTNERSHIP DEED EXECUTED BY THE APPELLANT F IRM ON 16-06- 2009. (II) DURING THE APPELLATE PROCEEDINGS, IT WAS SUBMI TEED BY THE APPELLANT THAT IT HAS CLAIMED PARTNERS REMUNERATIO N IN VIEW OF THE PROVISIONS OF SECTION 40(B) OF THE ACT AS APPLICABL E FOR THE RELEVANT ASSESSMENT YEAR AND THE AO WAS NOT JUSTIFIED IN RES TRICTING THE PARTNER REMUNERATION TO RS. 4,26,484/-. (III) I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL ON RECORD. IT IS NOTED THAT IN THE PARTNERSHIP DEED DATED 16-06-2009, THE APPELLANT HA S REPRODUCED THE PROVISIONS OF SECTION 40(B) OF THE ACT. FOR THE YEAR UNDER CONSIDERATION, IT HAS CLAIMED PARTNERS REMUNERATI ON IN VIEW OF THE AMENDED PROVISIONS OF SECTION 40(B) OF THE ACT WITH OUT MAKING CORRESPONDING AMENDMENT IN ITS PARTNERSHIP DEED. TH EREFORE, THE REMUNERATION TO THE PARTNERS IS TO BE ALLOWED AS PE R THE TERMS STATED IN THE PARTNERSHIP DEED DATED 16-06-2009. I DO NOT FIND ANY INFIRMITY IN THE FINDINGS RECORDED BY THE AO IN THE ASSESSMENT ORDER AS THE REMUNERATION TO THE PARTNERS IS TO BE ALLOWED IN VIEW OF THE PARTNERSHIP DEED. THUS, IT IS HELD THAT THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE OF RS. 2,23,516/- OUT OF REMUNE RATION CLAIMED BY THE APPELLANT AND HENCE THE SAME IS HERE BY SUSTAINED. IT IS PERTINENT TO NOTE THAT THE PROVISIONS OF SECT ION 40(B) ARE RESTRICTIVE IN NATURE AND PROVIDES THE CLAIM OF REMUNERATION TO PARTNERS AS ALLOWABLE DEDUCTION IF PARTNERSHIP DEED PROVIDES SO AND SUBJECT TO OUTER L IMITS PROVIDED IN SECTION 40(B)(V) OF THE ACT. THOUGH THE PARTNERSHIP DEED WA S EXECUTED IN THE YEAR 2009, HOWEVER, THE PROVISIONS OF SECTION 40(B) OF THE ACT ARE APPLICABLE AS EXISTED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THERE IS A REVISION OF THE AMOUNT OF REMUNERATION TO BE PAID TO THE PARTNERS AS PER AMEN DED PROVISIONS AND THEREFORE, WHEN AMENDMENT WAS ALREADY CARRIED OUT IN THE SAID PROVISIONS AND APPLICABLE FOR 4 ITA NO.852/JP/2017 M/S. SWASTIK AUTOMOBILES VS ITO, WARD- 2(2), JAIPU R THE ASSESSMENT YEAR UNDER CONSIDERATION THEN THE CL AIM OF THE ASSESSEE IS NOT ACCEPTABLE AS ITS CONTRARY TO THE EXISTING PROVISIO NS OF SECTION 40(B) OF THE ACT. ACCORDINGLY, THE TRIBUNAL DOES NOT FIND ANY ERROR O R ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A). HENCE, THE APPEAL OF THE A SSESSEE IS DISMISSED. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/2 019. SD/- FOT; IKY JKO (VIJAY PAL RAO) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 /09/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SWASTIK AUTOMOBILES, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2(2), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.852/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR