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TMI Blog2019 (11) TMI 1174X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is that the Ld. CIT (A) erred in confirming the disallowance of the expenditure of Rs. 5,66,925/- claimed against the business income received from the partnership firms. 2. The facts in brief are that the assessee in the present case is an individual and is a partner in 7 partnership firms. The assessee from such partnership firms is earning income by way of share of profit, remuneration and interest on the capital invested by him in the firms. The assessee during the assessment proceedings claimed that he has incurred an expense of Rs. 5,66,925/- against the income received from the partnership firm. As per the assessee, he has employed two persons, one is looking after managerial work and the other one is doing petty work in the capacity of the peon. Accordingly the assessee claimed that he is eligible for claiming the deduction of such expenses against the income received from the partnership firms. 2.1 However, the AO was of the view that such expenses as claimed by the assessee are incurred to meet his personal requirement. Therefore the same cannot be allowed as deduction against such income. Thus the AO disallowed the same and added to the total income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere contended on behalf of the department that the burden of showing that the amount was expensed wholly and exclusively for the purpose of the business had not been discharged by the assessee. On the contrary, the order of the Tribunal goes to show that it has found as a fact that the amount actually represented the expenses incurred for the business of the firm". On verification of records, it is observed that the appellant has not made any submissions even before the A.O or before the undersigned as to how the expenses incurred by the appellant and claimed under the head 'profits and gains of business or profession' have been expended for earning business income. The appellant has completely failed in discharging the burden casts on his by the statute. 9. In order to verify the claim of the appellant whether it has received remuneration/salary from the partnership firm, the computation of income filed by the appellant was perused. On going through the computation of income, it is noticed that the appellant has received salary income of Rs. 1,01,670/- from M/s. Dev Corporation and Rs. 44,737/- from Shri Siddhi Vinayak Enterprises, totaling to Rs. 1,46,407/- during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession. 9.2 In view of the aforesaid discussion, it is held that there is no force in the argument of the appellant and therefore, the ground of appeal taken by the appellant is dismissed and the order of the A.O is confirmed. Being aggrieved by the order of the Ld.CIT (A) the assessee is in appeal before us. 4. The Ld. AR before us filed a paper book running from page 1 to 40 and submitted that the reasonable disallowance can be made for the expenses incurred by the assessee. 5. On the other hand the Ld. DR supported the order of the authorities below. 6. We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case, the AO has disallowed the expenses claimed by the assessee against the income earned by him from the partnership firms on the ground that such expenses are personal in nature. The Ld.CIT (A) subsequently confirmed the view of the AO. 6.1 Indeed, the amount received by the assessee in the capacity of the partner from the partnership firm in the form of interest on the fund invested, remuneration for working in partnership firm and share of profit constitute income chargeable to tax under the head prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner is interested in all the assets of the partnership firm as each partner is owner of the assets to the extent of his share in the partnership. On dissolution of the partnership firm, accounts are settled amongst the partners and the assets of the partnership are distributed amongst the partners as per their respective shares in the partnership firm. From the above judgment it is clear that the partners are not separate from the partnership firms. Therefore the income of the partner from the firm is treated as business income. 6.6 Without prejudice to the above, we also note that the assessee can claim the expenses against the impugned income if it has been incurred to generate such income. For example, if the assessee has invested money in the partnership firm out of the borrowed fund, then the interest cost incurred by the assessee against interest income from the firm is eligible for deduction. However in the case before us, there is no issue regarding the interest income viz a viz interest cost. 6.7 Similarly, the share of profit received by the assessee from the firm is exempted under section 10(2A) of the Act, therefore there is no occasion to claim any expense against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee cannot get the benefit of the Hon'ble Gujarat High Court judgment as discussed above. 7.5 We are also conscious to the fact that the assessee has claimed the deduction against such income in the earlier years as evident from the income tax returns available on record. But the question arises whether the principle of consistency will be applied in the given facts and circumstances as held by the Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT reported in 60 Taxman 248 wherein it was held as under: "We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 14. On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter-and if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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