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2016 (8) TMI 274 - GUJARAT HIGH COURT

2016 (8) TMI 274 - GUJARAT HIGH COURT - TMI - Reopening of assessment - Deduction under section 80IB(10) - Held that:- Whether it was compulsory for the firm to pay interest and remuneration to the partners. In the context of limiting the claim of the partnership firm for reduction under section 80IB(10) of the Act, this issue may become relevant. We are however, not concerned with the question of non payment of interest or remuneration to the partners since the validity of the notice needs to b .....

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erial facts. Respective notices for reopening issued beyond a period of four years are therefore, quashed. Both petitions are allowed and disposed of. - SPECIAL CIVIL APPLICATION NO. 18366 of 2014 TO SPECIAL CIVIL APPLICATION NO. 18367 of 2014 - Dated:- 2-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONE : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These petitions arise in common backgrou .....

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143(3) of the Act on 29.12.2008 accepting the petitioner's return income. To reopen such assessment, the respondent Assessing Officer issued impugned notice dated 25.03.2014. He had recorded following reasons for issuing the notice. Reasons for belief that the income has escaped: The assessee is engaged in business of construction of housing projects. The return of income for the year under consideration was filed by the assessee on 31/10/2007, declaring total income of Rs. NIL. The assesse .....

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missible under section 40(b) (iv) of the Income Tax act, 1961 i.e. @ 12% per annum. The partnership deed also provided for paying of remuneration to the working partners as per section 40(b)(v) of the Act. On going through the office records, it is seen that the total balance in the capital accounts of the partners of the assessee firm for the year was ₹ 78,38,180/- . However, the firm had not provided for interest on the said capital balance, which amounts to ₹ 9,40,582/- . Further, .....

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ome ₹ 24,47,835/- . As such, I have a reason to believe that an amount of ₹ 24,47,835/- has escaped assessment in the hands of the assessee for the year under consideration. I am satisfied that the case of the assessee is a fit case for issuance of notice under section 148 of the Act. 2. The petitioner raised objections to the notice for reopening under a letter dated 02.07.2014. Such objections were however rejected by the Assessing Officer on 09.09.2014. 3. Learned counsel for the .....

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be reopened, that too, beyond a period of four years. 4. On the other hand, learned counsel Shri Mehta for the department opposed the petition contending that the Assessing Officer has recorded proper reasons. The assessee had artificially inflated profit of the eligible business. Such claim was required to be restricted. 5. In the partnership deed, with respect to interest on the partners' capital and remuneration to the partners, following provisions were made. (13) The interest may be pa .....

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