M/S. KOMAL AGENCY,NASHIK vs. INCOME-TAX OFFICER, WARD - 1 (3), NASHIK

PDF · subscribers
ITA 465/PUN/2019Status: DisposedITAT Pune29 July 2020AY 2014-154 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal directed the allowance of interest and remuneration to partners as per Section 40(b). Expenses paid through banking channels like bank commission, staff salary, and telephone bills were also allowed. The remaining expenses were disallowed at 20%.

What were the facts?

The assessee, a partnership firm, filed a return declaring Nil income. During assessment, expenses totaling Rs. 5,33,184/- were disallowed due to the assessee's failure to furnish details. The CIT(A) upheld this disallowance.

What were the issues?

The primary issue was the disallowance of expenses due to lack of details. The tribunal examined the allowability of partner remuneration, interest, and other business expenses.

Which sections of the Income-tax Act were involved?

Section 40(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE – VIRTUAL COURT

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri Piyush Bafna
For Respondent: Smt. Nishtha Tiwari/, Smt. Shraddha Nichal

PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT(A)-1, Nashik dated 01-01-2019 in relation to the assessment year 2014-15.

2.

The only issue raised in this appeal is against the confirmation of disallowance of expenses amounting to Rs.5,33,184/-.

1.

3. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of whosesale recharge vouchers. A return of income was filed declaring Nil income. The assessee recorded turnover of Rs.2.34 crores. In the Profit and Loss account, certain expenses totaling to Rs.5,33,184/- were debited. During the course of assessment proceedings, the assessee failed to furnish details of such expenses, which led to the disallowance of entire expenses. The ld. CIT(A) echoed the assessment order on this point. The assessee is aggrieved by the sustenance of disallowance of full expenses.

4.

We have heard both the sides through Virtual Court and gone through the relevant material on record. Out of the total expenses disallowed by the Assessing Officer, Interest on partners’ capital stands at Rs.17,128/- and remuneration to partners figures at Rs.1,46,348/-. Salary and interest to the partners have to be allowed in terms of section 40(b) of the Act. We, therefore, direct to allow these expenses. It is further observed that the assessee paid certain expenses through banking channels, such as, Bank commission amounting to Rs.52,259/-, Salary (staff) at Rs.2,37,486/- and Telephone expenses at Rs.11,763/-. Since these payments were made through banking channel, as has been specifically stated before the ld. CIT(A) as well, there cannot be any question of disallowance of such expenses by their very nature. As regards the other remaining expenses, we order to make disallowance at 20%. In other words, full amount of Salary and interest to partners along with Bank commission, Telephone bills and Salary to staff together with 80% of other expenses are allowed.

5.

In the result, the appeal is partly allowed. Order pronounced in the Open Court on 31st July, 2020.

Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 31st July, 2020 Satish आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2.

3.

The CIT(A)-1, Nashik 4. The Pr. CIT-1, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे / DR ‘SMC’, ITAT, Pune गाड� फाईल / Guard file 5. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 31-07-2020 Sr.PS 2. Draft placed before author 31-07-2020 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *

More judgments on Section 40(b)

All 428 judgments and leading authorities on Section 40(b) →

Recent GST High Court judgments

Search GST case law →