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2012 (9) TMI 698 - AT - Income TaxCharge on receipts - Diversion of income by overriding title - whether the amount paid by the assessee to wife of deceased partner of the firm is first charge on receipts of the firm in terms of clause 13 of the partnership deed executed on 1.4.2003 - Held that:- As decided in P. Bhumi Sudhar Nigam Vs. Commissioner of Income-tax (2004 (12) TMI 17 - ALLAHABAD HIGH COURT) that the principles relating to diversion of income by overriding title are (i) if a third person becomes entitled to receive an amount under an obligation of an assessee even before he could claim to receive it as his income, there would be a diversion of income by overriding title but when after receipt of the income by the assessee, the same is passed on to a third person in discharge of the obligation of the assessee, it will be a case of application of income by the assessee and not of diversion of income by overriding title - As in the present case there being an absolute contractual obligation imposed on the continuing firm/partners in terms of clause 13 of the partnership deed executed on 1.4.2003, the assessee firm is required to pay the amount @ 2% of the gross receipts subject to maximum of 3 lacs pa to Mrs. Mehru Menoo Shroof, wife of deceased partner of the firm and this amount being the first charge on receipts of the continuing firm/partners ,apparently, there would be a diversion of income by overriding title. Indisputably, a similar claim has already been accepted by the AO in the AY 2004-05 & 2006-07 no alternative but to allow ground in the appeal - in favour of assessee. Disallowance of General Repairs & maintenance expenses - Held that:- As the assessee has merely submitted a copy of ledger account in respect of expenditure exceeding above Rs.20,000/- each amounting to Rs.12,05,946/- while the details of expenditure below Rs.20,000/- are not available . Neither the AR nor the DR could explain the basis for disallowing the amount on repairs nor the impugned order is speaking one. Even the nature of repairs is not brought out in the impugned order nor it is stated that these repairs were current or otherwise. - Thus the order passed by the CIT(A) is cryptic and grossly violative of facets of the rules of natural justice for not passing a reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it - issue remitted back to CIT(A) to pass a speaking order, keeping in mind the mandate of provisions of sec. 250(6) bringing out clearly the nature of repairs ,whether current or otherwise - in favour of assessee by way of remand.
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