V S MAHADEVA IYER, PARTNERSHIP FIRM,TENKASI V. ITO, WARD (4), TIRUNELVELI

ITA 1850/CHNY/2024

AI Insights

The case involves an appeal by V.S. Mahadeva Iyer against the order of the Learned Commissioner of Income Tax, Appeal, National Faceless Appeal Centre (NFAC), Delhi, which confirmed the adjustment made by the Centralized Processing Center (CPC), Bengaluru. The adjustment disallowed a claim of remuneration to a partner amounting to Rs. 11,20,000 under section 40(b) of the Income Tax Act, 1961. The primary contention was that the CPC disallowed the claim without providing an opportunity to the assessee, and the CIT(A) found the partnership deed suspicious without substantial evidence. The Tribunal agreed with the assessee's argument that the salary paid to partners does not fall under the permissible adjustments under section 143(1)(a) of the Act, leading to the decision to remit the matter back for fresh adjudication.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107273 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-10-2024
• Assessment Year: 2023-2024
• Appeal Filed On: 03-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: S. SRIDHAR
• Keywords: Set aside
• Section: 143(1); 40(b)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ \u0011ा यपीठ, चे\u0016ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0019ी महा वीर िसंह, उपा \u001f एवं \u0019ी जगदीश, लेखा सद' क े सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1850/Chny/2024 िनधा :रण वष: /Assessment Year: 2023-24 V.S. Mahadeva Iyer, 1, BPC Dealer, Courtallam Road, Tenkasi – 627 811. [PAN: AAGFV 6521M] Vs. The Income Tax Officer, Ward-4, Tirunelveli. (अपीलाथ\u0007/Appellant) (\b\tयथ\u0007/Respondent) अपीला थG की ओर से/ Appellant by : Shri S. Sridhar, Advocate IJथG की ओर से /Respondent by : Ms. R. Anitha, Addl. CIT सुनवा ई की ता रीख/Date of Hearing : 23.10.2024 घोषणा की ता रीख /Date of Pronouncement : 23.10.2024 आदेश / O R D E R PER JAGADISH, A.M : Aforesaid appeal filed by the assessee is against the order of Learned Commissioner of Income Tax, Appeal, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 03.06.2024 vide intimation issued by CPC, Bengaluru u/s.143(1) of the Income Tax Act, 1961 (hereinafter “the Act”) dated 05.01.2014. ITA No.1850/Chny/2024 :- 2 -: 2. The only effective ground of appeal in this appeal of assessee is against confirming the adjustment made by CPC, Bengaluru in order u/s. 143(1) of the Act disallowing the claim of remuneration to partner of Rs. 11,40,000/-. 3. The CPC, Bengaluru in order u/s. 143(1) of the Act has disallowed the claim of salary paid to partner of Rs. 11,20,000/- u/s. 40B of the Act. On appeal, the Ld. CIT(A) has confirmed the addition as he found after calling the original partnership deed, he found that the deed of partnership is suspicious. 4. Before us, The Ld. Authorized Representative (A.R) of the assessee has contended that the assessee in the return of income has claimed salary paid to partner of Rs. 11,20,000/-, but the same has been disallowed by CPC, Bengaluru without providing any opportunity. The Ld. AR has argued that the salary paid to partners do not fall under the permissible adjustment u/s 143(1)(a) of the Act, and therefore, the CPC was not justified to make the adjustment. The Ld. AR further submitted that the CPC has not provided opportunity before making such adjustment. ITA No.1850/Chny/2024 :- 3 -: 5. The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities. 6. We have heard the rival submissions, and perused the materials available on record. The CPC in intimation passed u/s. 143(1) of the Act has made the disallowance of remuneration to partners of Rs. 11,20,000/- claimed u/s. 40(b) of the Act. The Ld. CIT(A) has confirmed the disallowance by calling partnership deed and finding it suspicious. The Ld AR has submitted that the CPC has not provided opportunity before making such adjustment and Ld CIT(A) was not justified to hold the partnership deed suspicious and confirming adjustment made in processing u/s 143(1) on such suspicion . In view of the above, we are of the view that the assessee be provided with opportunity to substantiate his case before the A.O. Accordingly, we set aside the orders passed by the A.O and the Ld. CIT(A) and remit the matter back to the file of the A.O to adjudicate this appeal afresh in accordance with law. In view of the above, the appeal filed by the assessee is allowed for statistical purposes. ITA No.1850/Chny/2024 :- 4 -: 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 23rd October, 2024. Sd/- Sd/- (महा वीर िसंह) (Mahavir Singh) उपा \u001f / Vice President (जगदीश) (Jagadish) लेखा लेखा लेखा लेखा सद\u0011य सद\u0011य सद\u0011य सद\u0011य /Accountant Member चे\u0013नई/Chennai, \u0016दनांक/Dated: 23rd October, 2024. EDN/- आदेश क\u0019 \bितिल\u001cप अ\u001dे\u001cषत/Copy to: 1. अपीलाथ\u0007/Appellant 2. \b\tथ\u0007/Respondent 3. आयकर आयु\u000f/CIT, Madurai 4. िवभागीय \bितिनिध/DR 5. गाड\u0018 फाईल/GF "