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2016 (6) TMI 337 - GUJARAT HIGH COURT

2016 (6) TMI 337 - GUJARAT HIGH COURT - TMI - Reopening of assessment - payment of interest to the partners on the capital investment and the remuneration to the working partners - as opined by AO by not providing for either of these two payments, the firm had artificially increased its profit which was otherwise exempt under Section 80(IA) - Held that:- To begin with, we fail to see how even if such facts are established, it can be said that income chargeable to the tax of the assessee had esca .....

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d “subsequently on verification of the case record and material available on record, it is found that.”. This would clearly demonstrate that all necessary facts were already on record and it was only on the basis of the case record that Assessing Officer formed the reason to believe that income chargeable to tax had escaped assessment.

Thus we cannot uphold the notice for re-opening which was issued beyond period of four years without there being even remote element of failure on the .....

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Act for short) proposing to reopen the assessment of the assessee for the assessment year 2009-10. 2. Brief facts are as under: The petitioner, a partnership firm for the assessment year 2009-10 had filed return of income which was taken into scrutiny by the Assessing Officer. He passed an order of assessment on 22.11.2011 under Section 143(3) of the Act. To re-open such scrutiny assessment; the Assessing Officer issued impugned notice which was clearly beyond period of four years from the end .....

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ly 1. Shri Karsanbhai Mohanbhai Patel 2. Dipakkumar Vachhani with profit sharing ratio of 30%, 30%, 20% and 20% respectively. However, it is observed that the assessee has not provided for partners capital interest of ₹ 30,00,782/- as per section 40(b)(iv) of the Act, worked out as under, during the year under consideration thereby made more profits than reasonable profits which would have accrued to the assessee and consequently claiming higher deduction under section 108 of the Act. S .....

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for remuneration to three working partners for ₹ 1,53,75,272/- as per section 40(b)(iv) of the Act on book profit worked out as under, during the year under consideration thereby made more profits than reasonable profits which would have accrued to the assessee and consequently claiming higher deduction under section 10B of the Act. ₹ 4,13,07,712/- (net profit) -30,00,782/- (interest) =Rs. 3,83,06,930/- (book profit) On first ₹ 75,000/- @ 90% or ₹ 50,000/- whichever is h .....

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e than ₹ 1 lakh chargeable to tax for A.Y. 2009-10 has escaped assessment in view of section 147 of the I.T.Act. Therefore, this is a fit case for issue of notice under section 148 of the I.T.Act, 1961. 4. The assessee raised objections to the process of reopening in the communication dated 2.7.2015. Such objections were however, rejected by the Assessing Officer by order dated 27.8.2015. Hence, the petition. 5. As noted above, the original assessment was framed by the Assessing Officer af .....

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