TMI Blog2019 (12) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... as per provisions of law. - ITA No. 3695/DEL/2016 - - - Dated:- 23-12-2019 - Ms. Sushma Chowla, Judicial Member And Shri N.K. Billaiya, Accountant Member For the Assessee : Shri Kapil Goel, Adv For the Department : Shri S.N. Meena, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals], Ghaziabad dated 18.05.2016 pertaining to assessment year 2012-13. 2. The solitary grievance of the assessee is that the ld. CIT(A) erred in not allowing the claim of interest on capital and remuneration to partners from the assessed income. 3. Briefly stated, the facts of the case are that a survey operation was conducted at the business premises of the assessee on 11.09.2014. In the aftermath of survey, the ld. counsel for the assessee declared net profit @ 8% of gross turnover, over and above the returned income as per return filed on 30.09.2012. 4. During the course of scrutiny assessment proceedings, the assessee was confronte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contains provision for interest on capital @ 12% per annum and clause 17 provides for remuneration to whole time working partners and method of computation of remuneration is also provided. 12. Vide supplementary deed dated 01.04.2010, manner of paying remuneration to whole time working partners have been revised. We find that in Assessment Years 2009-10 to 2011-12, the assessee has been claiming interest on capital and remuneration to partners, which are verifiable from the computation of income placed in the paper book. 13. The Hon'ble High Court of Allahabad in the case of Vijay Constructions 213 CTR 105 had the occasion to consider an appeal where the books of account were rejected and best judgment assessment was made. The relevant findings of the Hon'ble High Court read as under: The procedure for making assessment in a matter where voluntary return submitted by the assessee under Section 139(1) is not accepted by the assessing officer has been given under Section 143(3) whereas procedure for giving best judgment assessment is given under Section 144. Merely because the procedures for such assessment have been separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered partnership deed. It was also the specific case that these partners were working partners and they were entitled to salary and interest, as per terms of the deed in accordance with Section 40(b) of the Act. In the absence of any material having brought by the revenue in rebuttal and more so when no such plea was ever taken or raised in the appeal, as also no substantial question of law has been framed in this regard, the aforesaid plea is bound to fail. 14. The co-ordinate bench in the case of M/s B. Durga Reddy Co. in ITA Nos. 713 to 715/VIZ/2013 also had the occasion to consider similar issue. The relevant findings of the co-ordinate bench read as under: 12. The next issue emanated from the revenue appeal is deductions towards interest on capital and remuneration to partners. The A.O. did not allow the deductions towards remuneration to partners and interest on partner s capital accounts. The Ld. D.R. submitted that once net profit is estimated, no separate deductions towards interest on partner s capital and remuneration to partners is allowable as a deduction. The Ld. D.R. further submitted that the CIT(A) ought to have appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While estimating the income, the trading 17 I.T.A. Nos.79 to 85/Viz/2013 I.T.A. Nos.89 to 95/Viz/2013 Assessment Years : 2004- 05 to 2010-2011 Srivalli Shipping Transport results only are estimated on the basis of sales/gross receipts, meaning thereby, what is estimated is only the net profit before allowing any noncash expenditure/statutory deductions. Further, the quantum of depreciation would also depend upon the value of assets. For example, a business man having lower version of Car or Air conditioner would be entitled to claim lower amount of depreciation, since the cost of the lower version of car and Air conditioner will be less. Whereas another business man having higher version of Car and Air conditioner would get higher amount of depreciation, since the cost of those assets shall be higher. Hence, even if the level of operations and other things are equal between the two, the depreciation amount will be different due to the difference in the value of assets. Hence the total income shall also result in different figures between the two business men. The above said illustration would support the contentions of the assessee that the depreciati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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