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2016 (10) TMI 9

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..... 6) TMI 33 - ITAT MUMBAI). Respectfully, following the same principle, it is of the view that notional rent u/s 22 of the Act cannot be charged in the given facts and circumstances of the case. Accordingly, delete the addition and allow the appeal of the assessee. - ITA No.257/Mum/2015 - - - Dated:- 16-8-2016 - SRI MAHAVIR SINGH, JUDICIAL MEMBER For The Appellant : Shri Yogesh Thar, Shri Faril Bhatt, ARs For The Respondent : Shri Durga Dutt, Sr. DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of order of CIT (A)-9, Mumbai in Appeal No. CIT (A)-9/5(1) (3)/603/2013-14 dated 10-10-2014. Assessment was framed by ITO-5(1) (3), Mumbai for the assessment year 2011-12 u/s 143(3) of the Income T .....

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..... also confirmed the action of the AO relying on earlier decision of ITAT for assessment years 2003-04 and 2004-05. Aggrieved, now the assessee is in second appeal before the Tribunal. 5. I have heard the rival contentions and gone through the facts and circumstances of the case. Before me, the learned Counsel for the assessee first of all drew my attention to the assessee‟s paper book page 95 wherein a copy of a letter was filed before the Tribunal withdrawing the appeal on the ground that the past unabsorbed losses are sufficient to set off income even after estimation of notional income and as such practically, there is no tax effect suffered by the assessee. Therefore, the assessee withdrew the appeal for these two assessment ye .....

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..... e share has been ascertained on the assessment of the firm with regard to its profits. The Division Bench consisting of Chagla C.J. and Tendolkar J., while answering the question in favour of the assessee, addressed itself to the question as to what exactly the rights of a partner in a registered firm are with regard to deductions under s. 10(2) of the Indian I. T. Act, 1922. The revenue contended before the Division Bench of the Bombay High Court that s. 10 had no application at all since it dealt with the profits of a business carried on by the assessee exclusively and solely. Rejecting this contention, Chagla C.J., speaking for the Division Bench, held as under (p. 76): Mr. Joshi says that a firm under the Indian Income-tax Act is .....

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..... iram Jain v. CIT [1961] 43 ITR 405 (Guj), whether an assessee is entitled to set off his loss in the individual business against the share of the profits of a firm in which he was a partner taking over business as a running concern. The Division Bench, answering the question in favour of the assessee, posed a crucial question, whether a business which has been carried on by a partnership can be regarded as business carried on by a partner, and held (p. 412): A 'partnership' is defined by section 4 of the Indian Partnership Act as the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all. When a firm carries on business, it is a business carried on by the par .....

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..... stinction which is without any difference. The question is : can it be said that the partner is carrying on his business when the business is that of a firm in which he is a partner ? The same question came up for decision before this court again in CIT v. Arun Industries [1966] 61 ITR 241 (Guj) in a slightly different context. It involved a question of interpretation of s. 15C of the Indian I. T. Act, 1922, in its application to a registered firm and arose out of the assessment of a registered firm for the assessment year 1961-62. The question was whether exemption under s. 15C was available both to the registered firm and to the partners. In that perspective the Division Bench of this court, consisting of J. M. Shelat C.J. and P. N. Bhagw .....

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..... (Bom) (2012) 52 SOT 270 (Bom.) wherein it has been held that while computing income from house property, the portion of the property used by the Assessee Company in which the assessee is a partner, income cannot be assessed u/s 22 of the Act on notional basis. The learned Counsel for the assessee drew my attention to Para 5.1 of the Tribunal Order which reads as under:- The Hon ble High Court of Allahabad in case of Mustafa Khan (supra) and Hon ble High Court of Gujarat in the case of Rasiklal Balabhai (supra) have taken the view that the property used by the partnership firm in which the assessee is a partner has to be treated as the user for purpose of business of the assessee. The Hon ble High Courts had followed the view earlier t .....

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