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M/s Shiv Shakti Builders Versus Income Tax Officer, Range-II (4) , Fatehpur

2015 (12) TMI 454 - ITAT ALLAHABAD

Assessment of partnership firm as AOP - non filing of partnership deed - Held that:- The copy of the partnership deed should be filed alongwith the return but in case it was not filed alongwith the return, the AO should have asked the assessee to file the copy of the partnership deed. When the assessee filed the same before the ld. CIT(A), the ld. CIT(A) must have accepted the same, enclosing the copy of the partnership deed. Thus it is merely technical requirement so that the Revenue must have .....

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deed - Held that:- The remuneration and interest to the partner was disallowed by the AO as the assessee has been assessed as AOP not as a firm. Since while disposing off the ground No. 1 to 5, as already held that the assessee be assessed in the status of the firm accordingly direct the AO to allow interest and salary to the partners subject to the compliance of the conditions as stipulated u/s 40(b) of the Act. - Decided in favour of assessee.

Estimation of the profit in the case of .....

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of the ld. CIT(A) in which he has estimated the profit rate @ 5% of the total receipt. In the absence of any cogent material being brought on record from either of the side it is appropriate that the gross profit in respect of a sub-contractor be estimated @ 4% - Decided partly in favour of assessee. - ITA No.109/Alld/2012 - Dated:- 13-10-2015 - SHRI P.K. BANSAL, ACCOUNTANT MEMBER For The Assessee : Shri Praveen Godbole, A.R. For The Revenue : Shri A.K. Pandey, DR. ORDER This appeal has been fi .....

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evidence are incorrect. 3. That in any view of the matter assessment as framed by the assessing officer as per order dated 23.11.2007 in the status of A.O.P. and his action as confirmed by the Commissioner of Income Tax (Appeals) is highly unjustified. 4. That in any view of the matter appellant is a firm supported by a partnership document which was executed in time and the requirements of section 184(2) were complied hence the two lower authorities were wrong in adopting the status A.O.P. and .....

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eration of ₹ 90,000/- and payment of interest of ₹ 38,125/- to the partners as per the terms of partnership deed hence it is an allowable deduction but the two lower authorities are not correct in disallowing the same. 8. That in any view of the matter copy of partnership deed was filed in time and as per terms of deed, payment of salary and interest was claimed therefore, the two lower authorities were wrong in their action. 9. That in any view of the matter a rate of 7% as applied .....

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unt are not verifiable hence application of rate 7% is unwarranted and declared profit liable to be accepted. 2. The ground Nos. 1,2,3,4,5 & 6 relate to only issue of making the assessment of the assessee under the status of the AOP, not as firm. 3. Brief facts of the case are that; the assessee submitted income tax return on 31st October, 2005 on an income of ₹ 1170/-. The assessee enclosed audited balance sheet alongwith the return. The AO treated the assessee as AOP as the no partne .....

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y of the original partnership deed filed before the AO. I have also perused the application made by the assessee for the admission of additional evidence under Rule 46A before the ld. CIT(A). The assessee requested by this application that due to the non awareness, he was not aware of about the furnishing of the documents before the AO and therefore, he requested to kindly accept the same as additional evidence. 5. From perusal of Rule 46A, I noted that the case of the assessee, in our opinion f .....

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vide partnership deed dated 12.10.2004 between Shri Anand Kumar and Shri Ashish Kumar. The partnership deed has been executed on a stamp paper of ₹ 750/-. The firm has started the business for the first time on 12.10.2004, therefore, in my opinion it is possible that the assessee who is not aware of about the intricacies of the Income Tax Act and may not be aware of about the relevant provision that the copy of the partnership deed has to be enclosed alongwith the income tax return or the .....

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as under: (ii) There is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement there is no such maxim known to the law. 7. In view of the aforesaid dictum of law by the Hon ble Supreme Court; I am of the view that the assessee may not be aware of about the intricacies of the Income Tax Act. This fact is also proved from the conduct of the advocate on which the assessee has relied and to whom he has given the .....

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184(2) lays down as under: A certified copy of the instrument of partnership referred to in sub-section (1) shall accompany the return of income of the firm of the previous year relevant to the assessment year commencing on or after the 1st day of April, 1993 in respect of which assessment as a firm is first sought. 9. From the perusal of the aforesaid provision, it is apparent that on the part of the assessee firm to enclose the copy of the partnership deed alongwith the return as the word has .....

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shall not be admissible unless the accounts of the [undertaking] for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form duly signed and verified by such accountant. 10. In both the provision, the word has been used as shall . While interpreting the pro .....

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. Sanjay Kumar Bansal 219 Taxman 41 (Uttarakhand). 11. Bombay High Court has also taken the view that filing of the audit report alongwith the return is not mandatory in the case of CIT vs. Shivanand Electronics 209 ITR 63 (Bom). In this case I noted that the copy of the partnership deed should be filed alongwith the return but in case it was not filed alongwith the return, the AO should have asked the assessee to file the copy of the partnership deed. When the assessee filed the same before the .....

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assessee be assessed as firm not as AOP . Thus the ground No. 1 to 5 are allowed. 12. The ground Nos. 6, 7 & 8 relate to the disallowance of remuneration and interest to the partners in accordance with the partnership deed. After hearing the rival submissions, and going through the order of the tax authorities below. I noted that the remuneration and interest to the partner was disallowed by the AO as the assessee has been assessed as AOP not as a firm. Since while disposing off the ground N .....

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ounts and applied the proviso to section 44AD and estimated the income @ 8% on the total receipt of ₹ 63,45,732/- at ₹ 5,07,658/- when the matter went before the ld. CIT(A), the ld. CIT(A) agreed with the contention of the assessee that the provision of section 44AD are not applicable in the case of assessee as gross receipt exceeds ₹ 40 lacs but since the assessee did not produce the bills and vouchers in respect of the purchase of the material and other expenses. He took the .....

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