M/s. Venkata Sai Constructions, Hyderabad V. ACIT, Cir-6(1), Hyderabad

MA 69/HYD/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6605 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 13-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA KUMAR
• Assessee Lawyers: NIVEDITA BISWAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER MISC. APPLN. NO.69/HYD/2011 (IN ITA NO.874/HYD/10) : ASSTT. YEAR 2004-05 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 6(1), HYDERABAD. V/S. M/S. VENKATA SAI CONSTRUCTIONS, HYDERABAD ( PAN - AACFV 7832 M ) (APPLICANT) (RESPONDENT) APPLICANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : SHRI CHAITANYA KUMAR O R D E R PER G.C.GUPTA, VICE PRESIDENT: BY THIS MISCELLANEOUS APPLICATION, REVENUE HAS RE QUESTED FOR RECTIFICATION OF THE ORDER OF THE TRIBUNAL IN I TA NO.874/HYD/2010 FOR THE ASSESSMENT YEAR 2004-05 DATED 8.10.2010. 2. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ESTIMATION OF PROFIT SHOULD BE NET OF ALL DEDUCTION AND NO DEDUCTION FOR INTEREST AND SALARY PAID TO THE PARTNERS SHOULD BE SEPARATELY ALLOWED OUT OF THE ESTIMATED PROFIT OF THE ASSESSEE. SHE S UBMITTED THAT SINCE THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE REJECTED A ND NET PROFIT RATE HAS BEEN APPLIED, NO FURTHER DEDUCTION ON ACCOUNT O F INTEREST AND SALARY PAID TO PARTNERS ARE ALLOWABLE TO THE ASSESS EE. 3. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED T HE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTAT IVE. HE SUBMITTED THAT THE ISSUE OF DEDUCTION OF INTEREST AND SALARY PAID TO MA NO.69/HYD/2011 ( IN ITA NO874/.HYD/2010) M/S. VENKATA SAI CONSTRUCTIONS, HYDERABAD 2 PARTNERS IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VAMS HI CONSTRUCTIONS IN ITA NO.771/HYD/2010 DATED 25.8.2010. HE SUBMITT ED THAT A SIMILAR MISCELLANEOUS APPLICATION WAS PREFERRED BY THE DEPA RTMENT AGAINST THE ORDER OF THE TRIBUNAL IN THE CASE OF VAMSHI CONSTRU CTIONS (SUPRA) ALSO AND THE SAME HAS BEEN REJECTED BY THE TRIBUNAL VIDE ITS ORDER DATED 11.3.2011 IN M.A. NO.42/HYD/2011, ACCORDINGLY, THE PRESENT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE ISSUE OF DEDUCTION OF INTEREST AND SALARY PAD TO P ARTNERS IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE HYD ERABAD BENCH OF THE TRIBUNAL IN THE CASE OF VAMSHI CONSTRUCTIONS DATED 25.8.2010 (SUPRA). IN THAT CASE ALSO, SIMILAR MISCELLANEOUS APPLICATIO N HAS BEEN PREFERRED BY THE DEPARTMENT REQUESTING FOR RECTIFICATION OF T HE TRIBUNALS ORDER, SUBMITTING THAT THE ASSESSEE WAS NOT ENTITLED TO DE DUCTION TOWARDS PARTNERS SALARY AND INTEREST OUT OF THE NET ESTIMA TED INCOME DETERMINED BY THE TRIBUNAL. THE HYDERABAD BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 11.3.2011 IN MA NO.42/HYD/2011 IN T HAT CASE DISMISSED THE MA OF THE REVENUE, BY PASSING A SPEAK ING ORDER. THE TRIBUNAL IN THAT CASE HAS FOLLOWED THE DECISIONS OF HONBLE RAJASTHAN HIGH COURT IN THE CASES OF CIT V/S. JAIN CONSTRUCTI ON CO. & ORS(245 ITR 527) AND CIT V/S. HEERA LAL BHAT (158 CTR 59 RA J); AND THE DECISIONS OF THE HONBLE KERALA HIGH COURT IN THE C ASES OF MALLYEKKAL CONSTRUCTION CO. V/S. CIT (260 ITR 333) AND CIT V/S SURINDER PAL NAYAR (327 ITR 236). IN THESE FACTS OF THE CASE, W E HOLD THAT THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL DATED 8.10.2010 IN THE PRESENT CASE OF THE ASSESSEE, AND THE ASSESSEE IS ENTITLED TO DEDUCTION IN RESPECT OF INTEREST AND SA LARY PAYMENTS TO THE PARTNERS, AS PER THE PARTNERSHIP DEED, SUBJECT TO P ROVISIONS OF S.40(B) MA NO.69/HYD/2011 ( IN ITA NO874/.HYD/2010) M/S. VENKATA SAI CONSTRUCTIONS, HYDERABAD 3 OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THIS MISCELLANEOUS APPLICATION OF THE REVENUE, WHICH IS ACCORDINGLY RE JECTED. 5. IN THE RESULT, MISCELLANEOUS APPLICATION OF TH E REVENUE IS REJECTED. ORDER PRONOUNCED IN THE COURT ON THE CONCLUSION OF HEARING ON THE MISCELLANEOUS APPLICATION ON 15.7.20 11 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 15 TH JULY, 2011 COPY FORWARDED TO: 1. M/S. VENKATA SAI CONSTRUCTIONS, C/O. SHRI S.RAM A RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2. ASST . COMMISSIONER OF INCOME - TAX , CIRCLE 6 (1) , HYDERABAD 3. COMMISSIONER OF INCOME-TAX(APPEALS) TIRUPATI. 4. COMMISSIONER OF INCOME - TAX I II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.