TMI Blog2015 (7) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... al change in the relevant clause of the partnership deed when compared to year which were before the Tribunal. Therefore, following the precedents, he correctly allowed the claim of the assessee that the impugned payment to retired partners or spouses of the deceased partners under the terms of the partnership deed is diverted by overriding title.- Decided against revenue. Disallowance under section 14A - interest expenditure incurred for earning dividend income from the preference shares - Held that:- he ultimate conclusion of the CIT(A) in directing the Assessing Officer to recompute the disallowance u/s 14A of the Act in accordance with the decision of the Hon’ble High Court in the case of Godrej & Boyce (2010 (8) TMI 77 - BOMBAY HIGH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s credited in the Profit Loss Account for the year under consideration. The Assessing Officer show-caused the assessee as to why such payment be not disallowed, while computing total income for the year under consideration. 4. The plea of the assessee was that, the amount of ₹ 85,37,142/- was a prior and overriding charge on the receipts of the firm in terms of the partnership deed and the actual income can be arrived at only after reducing the impugned payments from the gross receipts of the year. Alternatively, it was canvassed that the expenditure of ₹ 85,37,142/- has been incurred for carrying on the profession of the firm and therefore it was allowable as an expenditure under section 37(1) of the Act. Assessee also ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no material change in the relevant clause of the partnership deed when compared to year which were before the Tribunal. Therefore, following the precedents, he allowed the claim of the assessee that the impugned payment to retired partners or spouses of the deceased partners under the terms of the partnership deed is diverted by overriding title. Against such a decision of the CIT(A), Revenue is in appeal before us. 7. Before us, it was a common ground between the parties that the precedents relied upon by the CIT(A) to delete the impugned addition continue to hold the field, and the same have not been altered by any higher authority. As a consequence, the order of the CIT(A) is hereby affirmed, and the Revenue fails in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nership firms. 7. The learned Commissioner (Appeals) ought to have appreciated that no disallowance under section 14A read with Rule 8D was made by the learned Assessing Officer in the assessment order for the aforesaid interest expenditure. 8. The learned Commissioner (Appeals) erred in directing the Assessing Officer to disallow under section 14A, interest expenditure incurred for earning share of profit from the other partnership firms without providing opportunity to the appellant. 9. Without prejudice to the above, the learned Commissioner (Appeals) ought to have appreciated that interest earned on capital account from other partnership firms would not be in the nature of exempt income, hence profit earned from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The learned Joint Commissioner erred in holding that the payment of ₹ 85,37, 142 to ex-partners or spouses of deceased partners is not in the nature of business expenditure. 15. The learned Commissioner (Appeals) ought to have held that the payment of ₹ 85,37,142/- under Clause 22 of the Partnership Deed is alternatively eligible as a deduction under section 37(1) of the Income-tax Act. By way of Ground of appeal nos. 1 to 13, assessee has challenged the addition of ₹ 4,65,023/- made by the Assessing Officer by invoking section 14A of the Act read with Rule 8D of the Income-tax Rules, 1962 (in short the Rules ). The assessee firm was found to have earned exempt income in the form of share of profit from ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 85,37,142/- paid to ex-partners and spouses of the deceased partners was allowable as a business expenditure and the CIT(A) erred in not allowing the deduction for the same u/s 37(1) of the Act. 13. The aforesaid is an alt`ernative plea that was raised by the assessee before the lower authorities. The substantive plea for deduction of the amount of ₹ 85,37,142/- on the ground of diversion by overriding title was allowed by the CIT(A), and it has been further affirmed by us while dealing with the appeal of Revenue in the earlier paras of this order. As a consequence, the aforestated alternative plea of the assessee is academic in nature, and the same was not pressed before us. In the result, the aforestated Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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