THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, SURAT vs. GHELANI BUILDERS, SURAT

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ITA 156/SRT/2017Status: DisposedITAT Surat03 May 2021AY 2014-154 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal affirmed the CIT(A)'s order, noting that the AO had not issued a show cause notice and had allowed similar deductions in a subsequent assessment year based on a supplementary partnership deed.

What were the facts?

The Revenue appealed against the CIT(A)'s order allowing deductions under section 80IB(10) which the AO had restricted. The assessee argued that the issue was covered by a previous ITAT decision in their own case for AY 2012-13.

What were the issues?

Whether the restriction of deduction under Section 80IB(10) by the AO was justified, especially when similar claims were allowed in subsequent years and no show cause notice was issued.

Which sections of the Income-tax Act were involved?

Section 80IB(10)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI PAWAN SINGH, Honble & Dr. ARJUN LAL SAINI, Honble

Hearing: 30.04.2021

O R D E R PER PAWAN SINGH, JUDICIAL MEMEBER: 1. This appeal by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-IV, Surat hereinafter referred as “Ld.CIT(A)” dated 28.07.2017 for the assessment year (AY) 2014- 15. The Revenue has raised following grounds of appeal:

1.

1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing deductions claimed under section 80IB(10) of the Act amounting to Rs. 10,46,04,525/-, which was restricted to Rs. 2,90,92125/- on account of allowable interest and remunerations to partners.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) ought to have upheld the order of assessing officer.

3. It is therefore prayed that the order of the Ld. CIT (A) may be set aside and the assessing officer may be restored.

2. At the outset of hearing the learned authorised representative (ld. AR) of the assessee submits that the grounds of the appeals raised by the Ghelani Builders AY 2014- Tribunal in assessee’s own case for assessment year (AY) 2012-13 in dated 21.04.2021. The ld. AR for the assessee submits that the copy of the decision of Tribunal for AY 2012-13 (supra) has been already sent (supplied) by way of e-mail to learned departmental representative (DR) for the revenue. The ld AR for the assessee further submits that the ld. CIT(A), while granting relied to the assessee followed the order of his predecessor for AY 2012-13, which has been affirmed by this Tribunal (supra).–

3. On the other hand the ld DR for the revenue after going through the order of ld. CIT(A) and the order of Tribunal for AY 2012-13(supra) submits that he strongly rely of the order of assessing officer.

4. We have considered the rival submissions of the parties and gone through the order of the lower authorities and the order of Tribunal for AY 2012-13 (supra). We note that this Tribunal in assessee’s own case in AY 2012-13, on similar set of facts and on similar grounds of appeals, while affirming the order of ld CIT(A) passed the following order:– “4. We have heard the submission of ld. CIT-DR for the Revenue and ld. Authorised Representative (AR) of the assessee. The ld. CIT-DR for the Revenue supported the order of AO. However, on confronting the fact that AO himself accepted the similar claim subsequent assessment year on the basis of second/supplementary partnership deed dated 01.04.2006. The ld.CIT-DR submits that the partnership deed dated 01.04.2006 was not brought in the notice of AO.

Ghelani Builders AY 2014-

5.

On the other hand, the ld.AR of the assessee submits that the AO before restricting the claim of assessee under section 80IB(10) of the Act has not given any show cause notice or opportunity to explain the facts. Before the ld.CIT(A), the assessee explained the fact that as per supplementary/second partnership deed dated 01.04.2006, the partners are not eligible for interest as well as remuneration. The ld.CIT(A) appreciated the fact and allowed full relief to the assessee. The ld.AR further submitted that in subsequent assessment year, the same AO while considering the partnership deed dated 01.04.2006 allowed full relief with regard to deduction under section 80IB(10) of the Act to the assessee. The ld.AR submits that he undertake to send the copy of assessment order for A.Y. 2013-14 passed under section 143(3) of the Act dated 11.03.2016. To support his contention, the ld.AR of the assessee also relied upon the decision of the Tribunal in Alidhara Texspin vs. ACIT in 198/AHD/2016 dated 03.05.2016, order of Hon'ble Gujarat High Court in PCIT Vs. Alidhara Texspin in Income Tax Appeal No.265 of 2016 [confirming the order of Tribunal] and in AL Reza Food vs. ITO in Income Tax Appeal No.633/AHD/2014 dated 13.03.2017.

6.

We have considered the rival submission of both the parties and perused the order of Lower Authorities carefully. We have noted that the AO restricted the claim of assessee under section 80IB(10) of the Act by disallowing remuneration and interest to the partner. Before restricting / disallowing claim the AO has not issued show cause notice to the assessee. Before the ld.CIT(A), the assessee explained that the AO has not considered the partnership deed dated 01.04.2006 wherein the partners are not eligible for interest and remuneration. The ld. CIT(A) after considering the contents of partnership deed dated 01.04.2006 held that the AO himself accepted the contents of second 3

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