ITO, Ward-1(1), Tirupati, Tirupathi V. S V Builders, Tirupathi, Tirupathi

MA 97/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4046 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 08-03-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V RAJITHA
• Assessee Lawyers: S RAMA RAO
• Section: 40(b); 201; 254(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER M.A.NO. 9 7 /HYD/2018 (IN ITA NO. 933 /HYD/201 7 ASSESSMENT YEAR: 20 10 - 11 ) S.V. BUILDERS, TIRUPATI PAN ABIFS 3139D VS. INCOME - TAX OFFICER, WARD 1(1), TIRUPATI (APP LICA NT) (RESPONDENT) ASSESSEE BY : SHRI S. RAMA RAO REVENUE BY : S MT. V. RAJITHA DATE OF HEARING : 0 8 - 0 3 - 201 9 DATE OF PRONOUNCEMENT : 08 - 0 3 - 201 9 O R D E R PER S . RIFAUR RAHMAN, A .M.: THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASSESSEE U/S 254(2) OF THE INCOME TAX ACT SEEKING RECTIFICATION/MODIFICATION OF PARA 4.1 OF THE ORDER OF THE TRIBUNAL DATED 18 /05/201 8 IN ITA NO. 933/HYD/2017, WHICH IS AS UNDER: 4.1. AS SEEN FROM THE GROUNDS, ASSESSEE HAS RAISED THE GROUND OF DEDUCTION U/S. 40(B) OF THE ACT. THIS ISSUE HAS NOT BEEN CONTESTED BEFORE THE CIT(A) IN THE GROUNDS RAISED BEFORE HIM. THEREFORE, THIS ISSUE BECOMES AN ADDITIONAL GROUND. HOWEVER, THIS BEING LEGAL GROUND, ASSESSEE CAN CONTEST. AS SEEN FROM THE PARTNERSHIP DEED PLACED ON RECORD, THE FIRST PARTN ER WAS ELIGIBLE FOR A FIXED REMUNERATION OF RS. 10,000/ - AND SECOND PARTNER IS ENTITLED FOR A REMUNERATION OF RS. 5,000/ - AND CLAUSE - 8 IN FACT EMPOWERS THE PARTNERS NOT TO CLAIM ANY REMUNERATION ALSO. SINCE THE REMUNERATION IS FIXED, THE PROVISIONS OF SECT ION 40(B) MAY NOT APPLY TO THE FACTS OF THE CASE, AS THE INCREASE IN INCOME DOES NOT EFFECT THE FIXED REMUNERATION CLAIMED UNDER THE PARTNERSHIP DEED. BE THAT AS IT MAY, ASSESSEE HAS RAISED THE GROUND, WE ARE OF THE OPINION THAT THIS ISSUE CAN BE EXAMINED BY THE AO IN THE LIGHT OF PARTNERSHIP DEED AND THE PROVISIONS OF SECTION 40(B) AFRESH. IF ASSESSEE IS ENTITLED FOR ANY DEDUCTION OF MORE THAN WHAT HE HAS ALREADY CLAIMED IN THE P&L A/C, THEN AO MAY CONSIDER THE SAME. GROUND IS CONSIDERED ALLOWED FOR STATIS TICAL PURPOSES. 2 M.A. NO. 9 7 /HYD/201 8 S .V. BUILDERS, TIRUPATI 2. REFERRING TO THE ABOVE PARA, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE OBSERVATION MADE BY THE ITAT IN THE LAST LINES OF THE SAID PARA THAT IF ASSESSEE IS ENTITLED FOR ANY DEDUCTION OF MORE THAN WHAT HE HAS ALREADY CLAIMED IN THE P&L A/C, THEN AO MAY CONSIDER THE SAME , IS NOT CORRECT, AS PER THE ORDER OF THE ASSESSMENT, THE AO HAS TO ESTIMATE THE INCOME AT 6% AND 8% AND ARRIVE AT THE INCOME. HE, THEREFORE, SUBMITTED THAT THE SAID PARA MAY BE MODIFIED ACCORDINGLY. 3. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS CONTENDED BY THE ASSESSEE, THE PARA OF 4.1 IS MODIFIED AS UNDER: 4.1. AS SEEN FROM THE GROUNDS, ASSESSEE HAS RAISED THE GROUND OF DEDUCTION U/S. 40(B) OF THE ACT. THIS ISSUE HAS NOT BEEN CONTESTED BEFORE THE CIT(A) IN THE GROUNDS RAISED BEFORE HIM. THEREFORE, THIS ISSUE BECOMES AN ADDITIONAL GROUND. HOWEVER, THIS BEING LEGAL GROUND, ASSESSEE CAN CONTEST. AS SEEN FROM THE PARTNERSHIP DEED PLACED ON RECORD, THE FIRST PARTNER WAS ELIGIBLE FOR A FIXED REMUNERATION OF RS. 10,000/ - AND SECOND PARTNER IS ENTITLED FOR A REMUNERATION OF RS. 5,000/ - AND CLAUSE - 8 IN FACT EMPOWERS T HE PARTNERS NOT TO CLAIM ANY REMUNERATION ALSO. SINCE THE REMUNERATION IS FIXED, THE PROVISIONS OF SECTION 40(B) MAY NOT APPLY TO THE FACTS OF THE CASE, AS THE INCREASE IN INCOME DOES NOT EFFECT THE FIXED REMUNERATION CLAIMED UNDER THE PARTNERSHIP DEED. BE THAT AS IT MAY, ASSESSEE HAS RAISED THE GROUND, WE ARE OF THE OPINION THAT THIS ISSUE CAN BE EXAMINED BY THE AO IN THE LIGHT OF PARTNERSHIP DEED AND THE PROVISIONS OF SECTION 40(B) AFRESH. THE OTHER PART OF THE ORDER, REMAINS, AS IT IS. 3 M.A. NO. 9 7 /HYD/201 8 S .V. BUILDERS, TIRUPATI 5. IN THE R ESULT, MA FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH , 2019. ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 8 TH MARCH , 2 01 9 . KV COPY TO: - 1. S.V. BUILDERS, 6 - 8 - 910, NGO'S COLONY, TIRUPATI. 2. INCOME TAX OFFICER, WARD - 1(1), TIRUPATI. 3. CIT(APPEALS) - TIRUPATI. 4. PR.CIT - TIRUPATI. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.