SRI GOPAL PANDEY,GARHWA vs. ITO WARD-3(5), DALTONGANJ

1 ITA No.63/Ran/2017

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.63/Ran/2017 A.Y. : 2010-2011 Sri Gopal Pandey, vs ITO Ward-3(6), Prop: M/s Maa Shardey Daltongaj Automobiles, SOH, Panchperwa, Garwah- 822114 PAN No. : AIJPP 4436 C Respondent (Appellant) .

Assessee by : Shri Pankaj Khejriwal, Advocate Revenue by :Shri P.K.Mondal, JCIT

Date of Hearing : 29.05.2018 Date of Pronouncement : 30.05.2018

O R D E R Per Pavan Kumar Gadale, JM: This is an appeal filed by the assessee against the order of CIT(A),

Ranchi, dated 21.12.2016 for the assessment year 2010-2011.

For that initiation of proceedings u/s 147 was illegal and 1. unjustified. Proceeding u/s 147 cannot be initiated on the basis of change of opinion. At the time of assessment made u/s 143(3) all informations/documents were submitted before Ld. Assessing Officer. There was no escapement of income. Proceedings u/s 147 was ab-initio null and void and fit to be deleted. For that initiation of proceedings u/s 147 was ab-initio null and 2. void. No recorded reasons were supplied to the appellant as such assessment made u/s 147 was illegal and unjustified.

2 ITA No.63/Ran/2017 For that Ld. C.I.T(A) was not justified for not considering 3. remuneration and interest received from partnership firm as business income. As per section 28(v) of the I.T. Act, 1961 the salary, bonus, commission or remuneration received from partnership firm is termed as business income. As such order passed by Ld. C.I.T.(A) was bad in the eye of law and fit to be deleted. For that the Ld. C.I.T.(A) was not justified for not considering 4. remuneration and interest received from partnership firm as business income on the basis of definition of business as given in the case of Narayan Swedeshi Weaving Mills vs CIT (26 ITR 765 SC). The above case was not related to the Income Tax Act rather it was case of Excess Profit tax Act. The finding was given by Hon'ble Apex Court in this case in the year 1954 i.e. before enactment of present Income Tax Act,1961. As such finding of Ld. C.I.T.(A) was totally wrong, unjustified and illegal. For that the Ld. C.I.T(A) was not justified for not allowing 5. expenses of Rs.4,14,420/- claimed under different heads deducted from business income received as remuneration and interest received from partnership firms. The expenses were fully reasonable and related with earning of appellant's business income. As such the order passed by Ld. C.I.T.(A) has no leg to stand and fit to be deleted. For that in any view of the case addition of Rs.4,14,420/- made 6. to the total income is highly excessive, incorrect and unjustified. 7. For that interest u/s.234A and 234B is to be charged on returned income and not on assessed income following the decision of Hon’ble Jharkhand High Court.

grounds No.1 & 2 and made endorsement. Accordingly, ground Nos.1 & 2

are dismissed as not pressed.

the assessee derives income from trading of petrol, diesel & lubricants and

filed the return of income for the assessment year 2010-2011 on

18.10.2010 with total income of Rs.5,58,370/- and the return of income was

duly processed u/s.143(1) of the Act and the case was selected for scrutiny

3 ITA No.63/Ran/2017 under CASS. Subsequently, notice u/s.143(2) & 142(1) of the Act were

issued to the assessee. In compliance, the AR of the assessee appeared

from time to time and case was discussed. Thereafter the AO completed

the assessment and made various additions and assessed total income at

Rs.5,93,205/- and passed order u/s.143(3) of the Act, dated 31.12.2012.

Subsequently it was noticed that the assessee had not considered

Rs.5,14,424/- in his computation. Accordingly, notice u/s.148 of the Act

was issued. The AO on examination of the evidences filed by the assessee

made an addition of Rs.5,14,424/-. The AO also retained the addition of

Rs.34,835/- made during the course of assessment u/s.143(3) of the Act

was made and assessed the total income at Rs.11,07,630/- and passed

order u/s.147/143(3) of the Act, dated 16.11.2015.

appeal with the CIT(A). In the appellate proceedings the assessee argued

the grounds and reiterated the submissions made before the AO. The

CIT(A) after considering the submissions of assessee and the findings of

AO, dismissed the appeal of the assessee.

before the Tribunal.

interest and remuneration received from partnership firm is business

income. As per section 28(v) of the I.T. Act, 1961 the salary, bonus,

commission or remuneration received from partnership firm is termed as

4 ITA No.63/Ran/2017 business income. Further with respect to ground No.5 & 6, the ld. AR of the

assessee submitted that the CIT(A) has confirmed the addition of

expenses claimed under the different heads of income deducted from the

business income received as remuneration and interest received from

partnership firms and the ld. AR also substantiated his stand of

remuneration received from the partnership firm relying on the income tax

details and prayed for allowing the claim

Prima facie, on the first disputed issue of taxability of remuneration and

interest received from partnership firm as business income. Ld. AR

submitted that the assessee is having proprietary business and interest

income is offered separately and also income from partnership firm in the

nature of remuneration and interest on capital. The AO and the CIT(A) has

not treated this income under the income from business and also

disallowed the claim of expenses of the assessee. Before us, ld. AR

demonstrated with copy of the income tax return for the assessment year

2010-2011 in respect of partnership Nandlal Pandey where assessee’s

share of profit and partnership remuneration was disclosed and further in

respect of second claim of income from partnership firm M/s Lalita

Construction, ld. AR substantiated with income tax return and also the

profit and loss account, partner’s remuneration and share of profit. We

found strength in the arguments of ld. AR and also on perusal of the

5 ITA No.63/Ran/2017 Section 28(v) of the Act which specifically mentions that the chargeability of

interest income and the remuneration of the partners which reads as under

:-

provisions of law, are of the opinion that the interest income and

remuneration are as per the provision of Act are taxable as business

income and accordingly we allow this ground of appeal.

Rs.4,14,420/-, which was claimed as deduction in the business income.

This expenditure was not allowed to the assessee. We find that the

assessee’s income is chargeable under the business income as discussed

above and also the assessee is entitled for the claim of expenditure which

is wholly and exclusively utilized for the earning of above income are

allowable. Ld. AO has disputed the genuineness of the expenses,

therefore, we are of the opinion that the assessee should not be deprived

to claim the addition if allowable. Accordingly, we direct the AO to verify the

6 ITA No.63/Ran/2017 expenditure as claimed on the business income and remit to the file of AO.

This ground of appeal is allowed for statistical purposes.

the Act, which is consequential, and the AO is directed to calculate the

interest u/s.234A & 234B of the Act as per the law laid down by the Hon’ble

jurisdictional High Court in case of Ajay Prakash Verma in ITA No.38 of

2010 reported in 2013(1) TMI 140. We order accordingly.

purposes.

Order pronounced in the open court on 30/05 /2018

Sd/- Sd/- (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated 30/05/2018 Prakash Kumar Mishra , Sr. Ps Copy of the Order forwarded to : 1. The Appellant – Sri Gopal Pandey, Prop: M/s Maa Shardey Automobiles, SOH, Panchperwa, Garwah-822114 2. The Respondent – ITO Ward-3(6), Daltongaj 3. The CIT(A) concerned 4. CIT , concerned BY ORDER, 5. DR, ITAT, Ranchi 6. Guard file.

//True Copy// SR.PS, ITAT, RANCHI