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2023 (10) TMI 969 - ITAT AHMEDABADAdjustment u/s 143(1) - inadmissible interest paid to partners in terms of Section 40(b) as reported in the Tax Audit Report filed by the assessee u/s 44AB - HELD THAT:- As not disputed by the DR that this amount of interest paid to partners was shown both as admissible and inadmissible in the Tax Audit Report itself takes the issue out of the purview of Section 143(1) of the Act, more particularly Section 143(1)(a)(iv) of the Act which has been invoked in the present case. As pointed out by assessee, the provisions of Section 143(1)(a)(iv) of the Act permits adjustment to the income of the assessee on account of expenses which are indicated as disallowable in the Tax Audit Report, but not disallowed while computing the total income of the assessee. In the present case, the Tax Audit Report indicates the amount as both admissible and inadmissible. Therefore, the provisions of Section 143(1)(a)(iv) of the Act were not attracted. Even otherwise, the purport of intimation u/s 143(1) is to make a preliminary assessment of the income of the assessee based on the documents filed along with the return of income, permitting the adjustment to be made only on those counts which are apparently liable to be made. Also find that the assessee has given a plausible explanation for this reporting in the Tax Audit Report pointing out that since in the computation of income this impugned amount of interest paid to partners was first added to the income and then claimed as deduction; therefore, inadvertently in the Tax Audit Report it was reported as both admissible and inadmissible. Grounds raised by the assessee are allowed.
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