TMI Blog2014 (4) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... are entitled to interest on the credit balance in the capital account, as prescribed u/s 40(b)(iv) of the I.T. Act 1961 @ 12%. The partners are also liable to pay interest on the debit balance in capital account on similar basis. It is further submitted that the liability to pay interest arises out of contractual obligation. The perusal of the copy of the Firm's assessment order for Asst. Year 2008-09 available at Paper Book Page 30 reveals that in the case of the firm M/s. MSN Enterprises the said interest has been assessed as income of the firm. Having considered the rival submissions, reasoning of the lower authorities and material on record, we are of the considered view that the claim of the assessee is emanating out of contractual obligation and is in consonance with the provisions of law. D.R. could not bring before us any contrary fact or case law which may justify departure from the above finding of the Tribunal given in the case of other partner of the firm namely Mr. Hansat Maneklal Savani. So respectfully following the same, for the sake of consistency, this issue is allowed in favour of the assessee. - ITA No.2338/M/2012 Assessment Year: 2008-09 - - - Dated:- 9-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said declared amount of ₹ 1.25 crores as business income. However, the Assessing Officer (hereinafter referred to as the AO) in the assessment framed under section 143(3) of the Act treated the said income under the head Income from other sources on the ground that during his statement made/survey action the assessee had failed to describe the exact nature of business in which he was engaged. The ld. CIT(A) confirmed the action of the AO in treating the income so declared by the assessee as income from other sources. Aggrieved from the order of the ld. CIT(A) the assessee is in appeal before us. 4. We have heard the ld. representatives of both the parties and also have gone through the records. At the outset the ld. A.R. of the assessee has contended that in case of Mr. Hansat Maneklal Savani, the other partner of the firm in question i.e. M/s. Savani Transport Ltd., the matter on the identical issue has already been adjudicated by the co-ordinate bench of this Tribunal vide order dated 20.12.13 passed in ITA No.2339/M/2012. The Tribunal, in the case of the other partner, who incidentally is the brother of the assessee, has allowed his claim in respect of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value and the statement obtained under section 133A would not automatically bind upon the assessee. Therefore, even assuming that there is a statement to the effect of admission by the assessee made during the survey, the same cannot be the sole basis for taking a decision by the revenue authorities during the assessment proceedings. Having noted the legal position, we do not find any reason for the authorities below to disbelieve the assessee's claim that is averred in the affidavit filed during the assessment proceedings. Further, merely not complying the provision of section 44AB of the Act cannot preclude the assessee from claiming/disclosing an income under the head 'business'. 2.3.1 It appears that the action of the AO and the reasoning of the Ld.CIT(A) for confirming the said action has been only for the purpose of placing the assessee in a position of denying the benefit of accumulated losses of earlier years to be set of against the business income. It is pertinent to mention that while deciding the issue regarding the relevant head of income, whether the assessee would get any other consequential benefit cannot be the guiding factor/test for deciding the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has been a partner. The AO rejected the claim of the assessee observing that the assessee had paid interest on debit balances with the firm and further that the said debit balances had arisen due to losses incurred by the firm in the earlier years. The ld. CIT(A) confirmed the disallowance of interest on debit balance. The assessee is thus in appeal before us on this issue. 8. At the outset, the ld. A.R. of the assessee has contended that this issue is also squarely covered in favour of the assessee vide order dated 20.12.13 passed in ITA No.2339/M/2012 in the case of Mr. Hansat Maneklal Savani who is the brother as well as the other partner of the firm M/s. MSN Enterprises. 9. We have gone through the order of the co-ordinate bench of the Tribunal. The relevant findings of the Tribunal given on the issue are reproduced as under: 3. In ground no.2, the assessee has agitated the action of the Ld.CIT(A) in confirming the disallowance of interest of ₹ 16.85 lacks made by the AO on account of the interest paid by the assessee to the firm in which he is a partner. 3.1 Briefly stated the facts are that the appellant is a partner in the firm M/s. MSN Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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