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VIPUL PARK - THROUGH PARTNER Versus INCOME TAX OFFICER - WARD 6 (4)

2016 (8) TMI 274 - GUJARAT HIGH COURT

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 be examined from the vital angle that the same .....

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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 background, we may record facts from Special Civil App .....

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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 assessee has claimed deduction u/s 80IB of the act of .....

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e 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, remuneration of ₹ 15,07,254/- was also .....

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ason 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 petitioner submitted that there was no failure .....

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r 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 paid on the credit capital balance of the partne .....

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