TMI Blog2019 (6) TMI 1303X X X X Extracts X X X X X X X X Extracts X X X X ..... fails and is hereby dismissed - R/TAX APPEAL NO. 165 of 2019 With R/TAX APPEAL NO. 168 of 2019 - - - Dated:- 24-6-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Appellant (s) : MRS KALPANA K RAVAL For The Opponent (s) : None COMMON ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. Since the issues raised in both the captioned Tax Appeals are the same and the assessees are also the selfsame, the Appeals were heard analogously and are being disposed of by this common judgment and order. 2. For the sake of convenience, the Tax Appeal No.165 of 2019 is taken up as the lead matter. This Tax Appeal is at the instance of the Revenue and is directed against the order passed by the Appellate Tribunal, Surat Bench at Surat, in the ITA No.205/SRT/2018 dated 26th October 2018 for the Assessment Year 2014-15. 3. In the case on hand, the assessment was finalized under Section 143(3) of the Act on 22nd December 2016 determining the total income at ₹ 2,95,33,190=00 after making addition on account of disallowance of the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the withdrawals made by the partners during the year under consideration. 5. The CIT(A), having regard to the grounds raised by the assessee and also having regard to the stance of the Revenue, held as under : I have considered the assessment order as well as the submissions of the appellant. The Grounds of appeal Ground No. 1 to 4 pertains to passing the order by holding that the interest and remuneration to partners are allowable though not provided in the partnership deed of the appellant firm for the purpose of computing the income from eligible business which is exempt u/s 10AA of the IT Act. Therefore, the order so passed by the AO being bad in law may kindly be quashed and working interest to partner ₹ 1,10,77,894/- and remuneration to partner ₹ 1,84,55,296/- and thereby reducing the income computed from eligible business to ₹ 1,21,53,533/- as against income computed at ₹ 4,16,86,723/- by the appellant (which is exempt u/s 10AA). The appellant derived income from manufacturing activity and claimed deduction u/s 10AA of ₹ 4,16,86,723/-. The AO found that the appellant has not claimed int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason why the appellant has not claimed both the expenses against the Business Income shown in Income Tax Return. The AO has mainly relied in the case of Meridian Impex (supra) to disallow the interest on capital partner remuneration but the facts in this case of Meridian Impex (supra) was different as there was the specific clause regarding the payment of interest on capital and partners remuneration in the original Partnership Deed submitted at the time of scrutiny assessment and the supplementary deed was made amending the clause regarding nonpayment of interest on capital and remuneration to partners. This supplementary deed was not submitted before the AO during the assessment proceedings. In the instant case, the Partnership Deed itself does not have any clause pertaining to payment of interest and remuneration to the partners. This issue came up for consideration before the jurisdictional ITAT Bench Ahmedabad, in the case of M/s Sagar Foods and Shreeji Dehydrate Export, 2017(3) TMI 1297. The Hon'ble Bench, in its order dated 22.02.2017, held that the AO could not have compelled the appellant to charge interest or remuneration by invoki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 10AA of the Act and thus, devoiding the revenue from due amount of tax? 3. On the facts and circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the assessing officer. 4. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of assessing officer may be restored to the above extent. 8. Ultimately, the Tribunal, while concurring with the findings recorded by the CIT(A), held as under : 6. On careful consideration of above rival submissions, from the relevant operative part of first appellate order, especially paras 6.1.3 6.1.4, we observe that the AO has relied on the order of ITAT, Rajkot Bench in the case of Meridian Impex 37 taxmann.com 22 (2013) but the facts of that case are different from the facts and circumstances of the present case as in that case there was a specific loss in the partnership deed regarding payment of interest on capital and partner s remuneration in the original partnership deed submitted during scrutiny proceedings. Subsequently, a supplementary/addenda to said partnership deed was made amending the said clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership deed, not to pay/charge interest on the partners capital and the remuneration, the learned tribunal has rightly deleted the disallowance made by the Assessing Officer with respect to the deduction claimed under Section 80IB of the Income Tax Act. As rightly observed by the learned tribunal, mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. We concur with the view taken by the learned tribunal. We see no reason to interfere with the impugned judgment and order passed by the learned tribunal. No substantial questions of law arise in the present Tax Appeal. The present Tax Appeal deserves to be dismissed and is accordingly dismissed. 10. Having heard the learned counsel appearing for the Revenue and having gone through the materials on record, we are of the view that the issue is squarely covered by the aforesaid decision of this Court. 11. In our opinion, no error, not to speak of any error of law, could be said to have been committed by the Appellate Tribunal in dismissing the appeal preferred by the Revenue and thereby affirming the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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