NAYANT MANEKLAL SAVANI,MUMBAI vs. ITO RG 7(2)(2), MUMBAI

In this appeal, the solitary issue raised by the assessee is arising from the action of the CIT(Appeals) in sustaining a disallowance of (Assessment Year : 2009-10) Rs.23,21,171/- representing interest paid to partnership firm while computing business income in the hands of the assessee.

In brief, the relevant facts are that the appellant is an individual who had filed his return of income for assessment year 2009-10 declaring a total income of Rs.8,39,730/- . In the course of the assessment proceedings, the Assessing Officer noted that assessee had earned interest from partnership firm, where he was a partner and also paid interest to another partnership firm M/s.MSN Enterprise, where also he was a partner. The interest paid to MSN Enterprise amounting to Rs.23,21,171/- on account of debit balance with the said firm was disallowed by the Assessing Officer while computing business income. This action of the Assessing Officer was upheld by the CIT(Appeals).

Before me, the Ld. Representative for the assessee relied upon the order of the Tribunal dated 09/04/2014 pertaining to assessmet year 2008-09, in assessee’s own case, wherein similar controversy has been decided in favour of the assessee. It was a common point between the parties that the aforesaid precedent continues to hold the field and has not been altered by any higher authority. Since facts and circumstances and the nature of dispute is similar in this year, following the order of the Tribunal dated 09/04/2014(supra), I set aside the order of the CIT(Appeals) and direct the Assessing Officer to allow the relief to the assessee in accordance with the aforesaid precedent.