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2016 (1) TMI 772 - AT - Income TaxAdmission of additional evidence - Held that:- The written submission supported by documentary evidence was forwarded to the AO for his examination and comments and the AO furnished remand report dated 26.06.2012 on the same. The copy of the remand report of the AO was also provided to the Assessee who also filed rejoinder before the ld.CIT(A). After considering the contentions of both the parties, the ld. CIT(A) observed that the additional evidences filed are relevant and vital that would go to root of the matter while deciding the issues to which they relate. He, therefore, admitted the same on record. We do not find any incongruity in this conclusion of the ld. CIT(A). The ld. DR failed to point out as to which of the conditions of Rule 46A was not fulfilled by the assessee - Decided against revenue Brought forward losses of firm - covered under section 187 OR u/s. 78 - change in the terms and conditions of the partnership - Held that:- CIT(A) has rightly allowed the appeal of the assessee on this issue because mere change in the profit sharing ratio would not amount to reconstitution of the partnership for the purpose of section 78 of the Act. It is not in dispute that all the partners after reconstitution of firm remained same and there is no instance of any incoming or outgoing partner. It is also borne out on record that the firm was incurring continuous losses and filing returns of income as such. if there is change in the constitution of a firm by way of a retirement or death of any partner, then the firm is not entitled to have carried forward and set off so much of the loss proportionate to the share of a retired or deceased partner which exceeds his share of profits. In the instant case, the reconstitution of the firm is not made as a result of retirement of any partner or death of any partner. As a matter of fact, the reconstitution of the partnership was made only as a result of changes in the profit sharing ratio amongst the partners. Therefore, in our considered opinion, the ld. CIT(A) has rightly allowed carry forward losses to be set off, as claimed by the assessee - Decided in favour of assessee Disallowance u/s. 37(1) - CIT(A) deleted the addition - Held that:- The narration made on bill No. SRK/4/(08-09)/154 dated 30.07.2008 is “To fee for representation in Block assessment proceedings before various Income-tax authorities (In response to notices)”. We have perused the block assessment order, which stood completed on 27.02.2004. Even the appeals against the block assessment proceedings stood disposed of on 20.12.2004. This shows that the work assigned to the consulting firm was completed in F.Y. 2004-05. But the liability was not created due to non issuing of bill by the Consulting Firm . We are agree with the arguments made done by Ld. AR. . The assessee has maintained the books of account in mercantile system and he did not make any provision in this regard in his books of account in earlier years. There is no agreement on record to indicate that the assessee may make such payments whenever he thinks fit. We, therefore, find that the ld. CIT(A) has rightly deleting the disallowance made by the AO - Decided in favour of assessee Addition of expenses towards repair of the building - CIT(A) allowed partial relief - Held that:- There is no good reason to interfere with the conclusion reached by the ld. CIT(A). The ld. CIT(A) while deciding this issue has taken into consideration the statement of repairs and maintenance as also the bills of repairs & maintenance submitted by the assessee, which could not be rebutted by the ld. DR before us. We therefore, find no error in the conclusion reached by the ld. CIT(A) - Decided in favour of assessee Addition account of expenses pertaining to rates and taxes u/s. 37(1) - CIT(A) allowed claim - Held that:-CIT(A) has rightly allowed these expenditure. We do not find any error in the finding of CIT(A) that the impugned expenditure were incurred by the assessee irrespective of the fact the same were paid by his sister concern. The bills raised were in the name of assessee and in the ledger account of assessee, the sister concern is shown as creditor. The expenditures were in the nature of annual commercial use charges, registration charges and regularization charges etc. The documentary evidences furnished by the assessee nowhere depict the nature of payment to be that of penalty in contravention of any law. In fact these payments were made in compensation to protect the asset which was being used for assessee’s business for so many years. No good ground is made out on behalf of the Revenue to hold that the impugned payments were in the nature of penalty. - Decided in favour of assessee Disallowance of interest and bank charges - CIT(A) allowed claim - Held that:- A perusal of the impugned order reveals that the ld. CIT(A) has deleted the addition only on the ground that such expenses were allowed in the preceding assessment years 2002-03 to 2006-07 on the identical facts. The record nowhere reveals whether the loan taken by the assessee was a term loan for construction/renovation etc. of building, or it was working capital loan taken for the purpose of business. No documentary evidences of the bank are available before us to ascertain this fact. Secondly, the ld. CIT(A) has failed to consider the new fact emerged only in the year under consideration, inasmuch as three floors of the building are let out by the assessee and remaining two floors were used for business purposes. Therefore, in case, it was a term loan taken for construction/renovation of building, then the expenses incurred by the assessee on such loan, shall be apportioned in the ratio of 60:40 as done in the case of other expenses dealt by the ld. CIT(A) itself. If it was a working capital loan, then it has to be thrashed out as to under what circumstances and for what purpose, the capital accounts of the partners were showing continuous debit balances. All these facts need verification at the stage of Assessing Officer before finally deciding the issue. We, therefore, think it appropriate to remand the issue to the file of Assessing Officer to decide the same afresh - Decided in favour of revenue by way of remand. Addition made u/s. 68 - CIT(A) allowed claim - Held that:- we find no justification to interfere with the order of the ld. CIT(A). It is notable that the lender is an old creditor, as he had an opening balance and his PAN was already available on record. During the enquiry made by AO in the remand proceedings, the creditor had satisfied the requirements of the AO. The copy of IT return of the creditor filed showing total income at ₹ 93,02,056/- in our opinion, goes to prove the creditworthiness of the creditor as also observed by ld. CIT(A). Considering all these facts, we are of the considered opinion that the ld. CIT(A) has rightly deleted this addition u/s. 68 - Decided in favour of assessee
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