ASSISTANT COMMISSIONER OF INCOME-TAX, (CENTRAL) CIRCLE, KOLHAPUR vs. M/S. MAHABHARAT CONSTRUTION CORPORATION, KOLHAPUR

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ITA 1944/PUN/2017Status: DisposedITAT Pune03 January 2020AY 2010-114 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 upheld the CIT(A)'s decision, finding that the partnership deed dated 29.04.2001 clearly stated that individual shares of partners were specified as equal. Therefore, the disallowance was not justified.

What were the facts?

The Assessing Officer disallowed interest on capital and remuneration to partners, citing that their profit shares were not specified in the partnership deed. The CIT(A) overturned this disallowance.

What were the issues?

Whether the disallowance of interest and remuneration to partners was justified when the partnership deed specified equal profit sharing.

Which sections of the Income-tax Act were involved?

Section 185,Section 184(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri V.K. Singh
For Respondent: Shri Pramod Shingte

This appeal by the Revenue arises out of the order passed by the CIT(A)-2, Kolhapur on 15-06-2017 in relation to the assessment year 2010-11.

2.

It is a recalled matter in as much as the earlier order passed by the Tribunal was recalled on 08-11-2019 in M.A.No.55/PUN/2019.

M/s.Mahabharat Construction Corporation

3.

The only issue raised in this appeal is against the deletion of disallowance of Rs.9,19,384/- u/s.185 r.w.s.184(1) on account of interest on capital and remuneration to partners.

4.

Briefly stated, the facts of the case are that the assessment u/s. 143(3) was completed on 16-10-2012.

Thereafter, the Assessing officer passed order u/s.154 making an addition of Rs.9,19,384/-, being, interest on capital to the partners to the tune of Rs.3,19,384/- and remuneration to partners at Rs.6.00 lakh on the ground that the share of profit was not specified in the original partnership deed dated 27-07- 1989 as amended on 29-04-2001 and later on 26-03-2009.

The ld. CIT(A) overturned the rectification order on this issue, against which the Revenue has come up in appeal before the Tribunal.

5.

Having heard both the sides and perused the relevant material on record, it is seen from the partnership deed dated 29.4.2001 made pursuant to the change in constitution that the relevant clause states that : ‘individual shares of partners are specified as equal’. Thus, it is apparent that the partners

M/s.Mahabharat Construction Corporation agreed to share profits equally. In this view of the matter, the view point of the Assessing Officer that the share of the partners was not specified, in my considered opinion, was rightly overturned by the ld. CIT(A). I, therefore, uphold the impugned order in directing to allow the interest and salary to partners amounting to Rs.9,19,384/-.

6.

In the result, the appeal is dismissed.

Order pronounced in the Open Court on 03rd January, 2020. Sd/- (R.S.SYAL) उपा�य� उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� पुणे Pune; �दनांक Dated : 03rd January, 2020 सतीश 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. आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Kolhapur 4. The Pr. CIT-2, Kolhapur िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

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