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M/s. Akshar World Travels Versus ITO, Ward-1, Gandhinagar.

2015 (10) TMI 1884 - ITAT AHMEDABAD

Disallowance of interest and remuneration paid to the partners - change in the partnership deed - Held that:- Hon’ble Calcutta High Court rendered in the case of CIT Vs. S.R. Baliboi & Associates [2015 (5) TMI 549 - CALCUTTA HIGH COURT] filing of the partnership deed along with return as contemplated in section 184 is a directory. If the assessee has filed the partnership deed during the assessment proceedings, then, it will be construed that the assessee has complied with the conditions of sect .....

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appeal before us against the order of the ld.CIT(A), Gandhinagar dated 17.10.2011 passed for Asstt.Year 2005- 06. 2. The assessee has taken seven grounds of appeal. In ground no.1, the assessee pleaded that the assessment order is not sustainable in the eyes of law, because notice under section 143(2) was not issued within the statutory time limit. In ground no. 2 and 3, the assessee has challenged reopening of the assessment by issuance of a notice under section 148 of the Income Tax Act. The l .....

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essment order was passed under section 143(3) on 17.9.2007. The assessment has been reopened by issuance of notice under section 148 on 15.3.2010. According to the AO, there was change in the partnership deed. One of the partners died, and on 19.1.2005 a new partner was admitted in place of erstwhile partner. The assessee failed to submit new partnership deed along with return of income, therefore, remuneration paid to the partners and interest, cannot be allowed in view of section 184 r.w.s. 18 .....

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the deduction of expenses like interest, salary etc., has to be denied for the entire assessment year once the provisions of sec. 184 are not complied. There is no ambiguity in the provisions of this section. The appellant s plea that such expenses could have been disallowed only for the period after change in constitution of the firm is not legally valid and is dismissed. 6. Before us, the ld.cousnel for the assessee on the strength of judgment of the Hon ble Calcutta High Court rendered in th .....

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circumstances, we find that the Hon ble Calcutta High Court has held that the filing of the partnership deed along with return as contemplated in section 184 is a directory. If the assessee has filed the partnership deed during the assessment proceedings, then, it will be construed that the assessee has complied with the conditions of section 184. The assessee has filed the copy of new deed during the regular assessment proceedings. It is discernible from the submission made by the assessee and .....

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of partnership deed along with the return will make the claim of the assessee illegal so as to deny the claim of the assessee though the requisite details and the evidence is made available to the A.O. before he completes the assessment. The Hon'ble Delhi High Court has also held in the case ofRemfry & Sons v. CIT [276 ITR - 1] that non filing of the partnership deed is an irregularity and is a curable defect, which gets cured by filing the same in the assessment proceedings. Further the .....

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t and the application shall be accompanied by the original instrument evidencing the partnership at the date of the application. The words, "evidenced by an instrument of partnership" do not indicate necessarily that the evidence should be a contemporaneous evidence when the application is made, because, in the ultimate analysis, the purpose of any evidence, and for that matter the instrument of partnership, is to satisfy the authority that there was a genuine and valid partnership in .....

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roceedings will disentitle the assessee to claim the remuneration paid to the partners, which is paid in accordance with the provisions of the deed of partnership and the provisions of the Act. In view of the above, we hold that the Ld. CIT(A) has rightly deleted the disallowance of ₹ 4,49,60,000/- made by the A.O. Hence, we reject the Ground No.1 of the appeal taken by the Department.' [Hon ble High Court Order] It is this order which is under challenge. 7. Mrs. Das De, learned advoca .....

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been impressed by such submission. 8. We are of the opinion that the view taken by the learned Tribunal is the correct view. We may add further reasons why the view taken by the learned Tribunal is unimpeachable. The assessee is required to file return under sub-section 1 of Section 139 within the time prescribed therein. What is the time prescribed has been dealt with in Explanation 2 appended to subsection 1 of section 139. This requirement of law has to be held subject to the provision of su .....

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rtion of the said judgment reads as follows : "It can well be said that section 22(3) is merely a proviso to section 22(1). Thus, a return submitted at any time before assessment is made is a valid return. In considering whether a return made is within time sub-section (1) of section 22 must be read along with sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made .....

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