Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 330 - ITAT PUNENature of expenditure - amount paid on retirement of partner - Allowable revenue expenditure or capital expenditure - as per AO cannot be allowed as deduction and, accordingly, added to the closing work-in-progress by disallowing the same as deduction u/s 37(1) - CIT(A) held that the provisions of section 45(4) has no application and, therefore, disallowance of payment by holding to be capital expenditure is not justified, it should be allowed as revenue expenditure - AR submits that the amount was paid to the retiring partner on account of settlement arrived at between two partners towards the expenditure incurred at that time and, therefore, it is not the amount paid to the retiring partner. HELD THAT:- As carefully gone through the registered settlement deed, wherein, it clearly shows that the amount was paid to the retiring partner in terms of settlement arrived at between two partners for giving up his interest in the partnership firm, there cannot be any dispute that the amount paid to a retiring partner for giving up his interest in the partnership firm is a capital expenditure. See Sangam Enterprises [1999 (6) TMI 16 - ANDHRA PRADESH HIGH COURT] and Standard Makings & Allied Products Corpn [1997 (1) TMI 49 - GUJARAT HIGH COURT] CIT(A) without appreciating proper facts of the case went on to hold that the payment of money to the retiring partner is revenue expenditure. In the circumstances, the findings of the ld. CIT(A) cannot be accepted in the eyes of law. Therefore, the decision of the ld. CIT(A) is reversed. Thus, the grounds of appeal filed by the Revenue stand allowed.
|