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TMI Blog2018 (10) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in holding that an HUF cannot be a partner in a firm ignoring the fact that the assessee HUF has been assessed for years as partner in the firm. 4. That the Ld. CIT(A) has erred in treating the original return filed by the assessee on 1.10.2010 (as extended by the Board) as belated return on the incorrect ground that: i) An HUF cannot be a partner in a firm and accordingly, ii) Provisions of Explanation-2 (iii) to section 139(1) are not applicable to an HUF and accordingly, iii) The due date of filing of the return as applicable to an HUF even if a partner in a firm whose accounts are required to be audited under the Act, is 31st July and not 30th September. 5. That the Ld. CIT(A) has erred in not considering the alternative claim of the assessee that as per the Board Circular No. 14 dated 11.4.1955 and much precedents in favour of the assessee, any claim permissible under law can be made even during the course of assessment proceedings without filing a revised return. The AO is to assess the correct income as per the provisions of the Act even if a claim permissible under the Act is not made in the return. As such non allowance of the claim of the assessee u/s 80C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. As per above audit memo, the Assessing Officer rectified his order u/s. 154 of the Act by holding that the HUF cannot become a working partner and therefore, the assessee does not come within the definition of working partner as per section 40(b) , Explanation-4 of the Act and disallowed the deduction claimed through the revised return. The assessee filed appeal before the ld. CIT(A), where he made a written submission and the first appellate authority after considering the submissions of the assessee and the order of the Assessing Officer affirmed the order of the Assessing Officer after relying on some case laws. Aggrieved, the assessee is in appeal before the ITAT. 4. The ld. AR of the assessee submitted a written synopsis, which is as under : GROUND NO. 1 2. This ground relates to validity of the order u/s 154 of the Act confirmed by the Ld. CIT(A) by disregarding the fact that there is no mistake apparent from record capable of being rectified u/s 154 of the Act in this case and as such too the disallowance as made in the order under appeal is unlawful. SUBMISSION 3. At the outset it is submitted that in the present case, there is no mistake apparent from record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectified u/s 154 of the Act in this case and as such too the disallowance as made in the order under appeal is unlawful. GROUND NO. 2 to 4 4. These grounds relate to the validity of revised return filed by the assessee on 21.11.2011. The Assessing Officer has treated the revised return as invalid return on the ground that the assessee has filed original return on 1.10.2010 which is a belated return and the same cannot be revised u/s 139(5) of the Act. SUBMISSIONS 5. While passing the rectification order u/s 154, the Ld. A.O. has erred in treating the original return filed by the assessee on 1.10.2010 as belated return on the incorrect ground that the assessee being an HUF cannot be a working partner in the firm and accordingly the due date of filing the return cannot be that applicable to firm where accounts are required to be audited. Further, the Ld. A.O. has erred in relying upon the definition of working partner as defined in explanation 4 of clause (b) of section 40 in context of section 139(1). Further the said definition of 'Working Partner' is only for the purpose of Section 40(b) only and the same cannot be used in context of Section 139(1) for the purpose of det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the return of income for a working partner of a firm whose accounts are required to be audited under this Act or under any other Law for the time being in force is 30th September of the assessment year. The assessee HUF being the working partner of the firm represented by its Karta, therefore undoubtedly the due date in case of the assessee for filing of return of the income shall be as per the aforesaid provisions. As such it is submitted that the order of the Ld. AO in treating the original return as belated return and accordingly, the revised return as invalid return is based on misunderstanding of facts and law and the same deserves to be quashed. GROUND NO. 5 6. This ground relate to disallowance of Rs. 1,00,000/- being the amount of deduction claimed u/s 80C by way of revised return. The said disallowance has been made by the Ld. AO on the ground that the same was not permissible under law because the 6. This ground relate to disallowance of Rs. 1,00,000/- being the amount of deduction claimed u/s 80C by way of revised return. The said disallowance has been made by the Ld. AO on the ground that the same was not permissible under law because the same was not claimed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings of the CIT(A) that the claim made by the assessee was a perfectly legal claim supported by the method of accounting which the AO has accepted from year to year, the Tribunal upheld the order of CIT(A).' Hon'ble Punjab & Haryana HC in its judgment dated 8.12.2008 in the case of CIT Vs. Ramco International, 332 ITR 0306 (P&H), wherein assessee's claim u/s 80-IB during assessment proceedings which was made through letter was not admitted by the AO, while allowing the claim of the assessee has held as under: "the assessee was not making any fresh claim and had duly furnished the documents and submitted the form for claim under section 80-IB. There was no requirement for filing any revised return. 6.4 In any case, as per the decision of the Apex Court in the case of Goetze (India) and various decisions of other High Courts, if claim is not made before the assessing officer, it can be made before appellate authorities. As such, we request your goodself to kindly consider and allow the appellant's additional claim of deduction u/s 80C which was inadvertently could not be claimed in the income tax return due to non-availability of the documents at the time of filing return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he individuals constituting the firm. An HUF directly or indirectly cannot become a partner of a firm because the firm is an association of individuals. Even if a person nominated by the HUF joins a partnership, the partnership will be between the nominated person and the other partners of the firm. It further observed that if a karta or any other member of the HUF joins a partnership, he can do so only as an individual. His rights and obligations vis-a-vis other partners are determined by the Partnership Act and not by Hindu Law. Whatever may be the relationship between an HUF and its nominee partner, in a partnership, neither the HUF nor any member of the HUF can claim to be a partner or connected with the partnership through a nominee. 28. From the judgments cited above it stands established that an HUF as such cannot be a partner in a firm but it is competent to the manager or karta acting on behalf of the HUF to enter into a valid partnership with a stranger or with the karta of another family." From the above judgment, it is clear that the Hon'ble Court has considered the earlier judgments and concluded that the HUF itself cannot become a working partner in the partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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