9911796707
TMI Blog2012 (12) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 30.03.2011, passed by the CIT u/s 263 of the Act. In these grounds of appeal, the assessee has challenged the issuance of notice, dated 15.3.2011, for the purpose of invoking provisions of Section 263 of the Act. The assessee has filed brief synopsis, which is relevant for the present appeal and the appeal in ITA No. 512/Chd/2011 for assessment year 2006-07, against the order of CIT dated 30.3.2011. 3. In the course of present appellate proceedings, the ld. 'AR' contended that the order, passed by the CIT u/s 263 of the Act is bad in law as the AO has considered and adjudicated all the issues, raised in the impugned order u/s 263 of the Act, while framing the assessment. 4. Ld. 'AR' contended that the issues, which have been cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 43D. The Income from Partnership is : - Salary as Partner - Interest on Partner's Capital - Share of profits The Assessing Officer, after detailed enquiries, examination of record & discussions allowed depreciation on car against Income from Partnership firm to the Appellant vide giving detailed reasoning in his Assessment order. The CIT has in his order u/s 263 proposed the same to be an order erroneous and prejudicial to the interest of the revenue. ASSESSMENT YEAR 2006-07 ONLY ONE ISSUE Allowance of Depreciation on Car against Income from Partnership firm. JUDGEMENTS 1. Erroneous & Prejudicial to Revenue CIT vs Max India Ltd (2004) 268 ITR 128 The Hon'able Punjab & Haryana Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm, after appreciation of the submissions and legal position, explained by the assessee, in the submission, as reproduced in the said assessment order. However, the AO, disallowed 1/6th of the car depreciation i.e. Rs.34,612/- to cover up the personal nature of expenses, under this head. The relevant part of the assessment order is reproduced hereunder : "The contention of the counsel on this ground is acceptable because as per section 28(v) of the Income Tax Act, 1961 any interest and salary due to or received by a partner of a firm from such firm is considered as profits and gains of business and profession. Once an income is treated as business income depreciation u/s 32 is allowable on the same. Hence, the assessee is justified in cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Depreciation of Rs.1,73,098/- and erred equally in not allowing a part of Depreciation of Rs.34,612/-. In fact he should have disallowed the full claim being not admissible" 8. Having regard to the fact-situation of the present case, and the conscious view taken by the AO, after appreciation of the submission f i led by the assessee, in the matter, the CIT is not competent u/s 263, to substitute his view in place of conscious and, legally permissible view, taken by the AO. This view is supported by several decisions of the High Courts and Hon'ble Supreme Court. However, the issue is squarely covered by the decision of the Hon'ble Supreme Court, in the case of Malabar Industrial Co. Ltd.V CIT, 243 ITR 83(S.C) . 9. The AO made an additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed by him to his employer to enable him to correctly calculate his taxable income. This fact is clear from perusal of Form No. 16 dated NIL signed by assessee himself in his capacity of DDO which shows tax paid amounting to Rs.2,76,900/- vide book adjustment vide, Punjab's letter No. D.C.-l /203/IT/2005-06/299-300 dated 28.07.2005. In Form No. 16 total income calculated by employer is Rs.9,09,299/- on which total tax has been worked out at Rs.2,76,900/- and paid by employer. In the return of income dated filed on 16.12.2005, the assessee has claimed tax refund of Rs. 1,13,408/- on the declared total income of Rs. 7,38,669/-. The refund was issued vide R.V.No. 039952 dated 02.11.2006 amounting to Rs.1,19,131/-. From the sequence of event ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the income of Rs.18,339/- in respect of interest paid by the employer, as is evident from findings of the ld. CIT, reproduced above. The issue, in question has been dealt with and considered by the AO, after application of mind and making requisite enquiries. Therefore, CIT is not competent u/s 263 of the Act to substitute his opinion, in place of the view taken by the AO. In view of the above discussions, the issue falls beyond the purview of the provisions of Section 263 of the Act. 12. Having regard to the above legal and factual discussions, the impugned order of the CIT, falls beyond the statutory pale of Section 263 of the Act. This view is further supported by the decision of the Apex Court and jurisdictional High Court, cited b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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