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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-36, Mumbai [in short CIT(A)], in appeal No. CIT(A)-36/IT-134/JCIT-24(1)/15-16, dated 30.11.2016. The Assessment was framed by the Jt. Commissioner of Income Tax, Circle- 24(1), Mumbai (in short JCIT/ITO/ AO) for the A.Y. 2012-13 vide order dated 24.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of assessee is against the order of CIT(A) in confirming disallowance of remuneration paid to partner amounting to ₹ 90 lacs. For this assessee has raised the following ground No.1: -
“The Commissioner of Income Tax (Appeals)- 36, Mumbai has erred in confirming the disallowance made by the Assessing officer in respect of the remuneration paid to the partner (Mr. Raviraj Goyal) amounting to Rs 90,00,000 inspite of the fact that remuneration was paid to working partner who is a working partner since inception of the partnership firm.
Briefly stated facts are that the AO during the assessment proceedings noticed that the assessee has paid remuneration to its two partners namely Mr. Ravi Goyal and Shri Manish Goyal amounting to ₹ 90 lacs each, in totaling to ₹ 1.80 lacs during the year. The AO require the assessee to file partnership deed. The AO noticed from the partnership deed dated 31.11.2002 that the firm started its business in the name of M/s Armani Exports on 01.04.2002 with the following three parties: -
“1. Ravi Ramavtar Goyal 33% working partner.
2.Padma Ramavtar Goyal 34% non-working
3. Vinod Chandru Wadhva 33% Working partner."
Subsequently, the partnership deed was changed vide partnership deed dated 30.11.2002, wherein the following partners were added with the following profit sharing ratio: - Sr. Partner Profit Sharing Status Remuneration No. Ratio 1. Vinod Chandru Wadhva -- Retiring partner Nil 2. Ravi Ramavtar Goyal 33% Working Partner 90 lakhs 3. Padma Ramavtar Goyal 34% Non working Nil 4. Manish Ramavtar Goyal 33% Incoming/working partner 90 lacs 4. Subsequently, the assessee noted that through oversight, there remains a typing error while typing the deed of admission cum retirement dated 30.11.2002, wherein it was originally typed as first and fourth partners as working partners instead of second and fourth partners as working partners, which was letter on rectified and the same was signed by all the partners again and affidavit to this fact was submitted before the Assessing Officer. The AO disallowed the remuneration paid to the partner Mr. Ravi Ramavtar Goyal who is working partners of the firm since its inception of the firm i.e. 01.04.2001. The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, now assessee is in appeal before Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. We find that this amendment was brought in by the deed of admission cum retirement dated 30.11.2002 and this partnership deed i.e. vide dated 30.11.2002 and in earlier years the same deduction was claimed and allowed by the Revenue consistently. Now before us, the Revenue could not point out what is the infirmity in the partnership deed except the correction as carried out on 30.11.2002 and Revenue is consistently allowing these remunerations paid to Ravi Ramavtar Goyal at the rate of 90 lacs per annuam. In our view, in this year also there is no reason to disallow the remunerations paid as the same are consistently allow from the past years and even otherwise, this payment of remunerations is taxed in the hands of the assessee firm’s partner namely Ravi Ramavtar Goyal, who has disclosed his remuneration in his return of income for the relevant AY 2012-13. Hence, we find that the claim of assessee is allowable and we accordingly, allow the claim. This issue of assessee’s appeal is allowed.
The second issue is as regards to the order of CIT(A) in confirming the disallowance of proportionate interest amounting to ₹ 14,99,207/-. For this Assessee has raised the following ground No. 2 : -
“2. The Commissioner of Income Tax (Appeals)- 36, Mumbai has erred in confirming the disallowance made by the Assessing officer in respect of the proportionate interest amounting to Rs 14,99,207 inspite of the fact that advance was given for the purpose of purchase of property in 2007 to 2009 and not in current year."
At the outset, the learned Counsel for the assessee stated that he has instructions from the assessee not to press this ground and accordingly, the same is not pressed. Hence, this ground is dismissed as not pressed.
In the result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 08.05.2019.