TMI Blog2021 (10) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... rship was revised on 01.04.2008 i.e. much prior to the selection of return for scrutiny - AO disregarded the contention of the assessee and disallowed the part remuneration under section 80IB of the Act to the extent of ₹ 2,73,90,313/- thereby disallowed ₹ 2,04,07,333/-. CIT(A) allowed the relief to the assessee by following decision of Tribunal in the case of Alidhara Taxspin Engineers [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] wherein it was held that mere incorporation of interest on the partners capital and remuneration does not signify that the same are mandatory in nature. The similar view taken by Hon'ble jurisdictional High Court in the case of M/s Sanidhya [ 2020 (2) TMI 588 - GUJARAT HIGH COURT] by following i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als)-1, Surat (CIT(A) for short) dated 09.08.2017 for assessment year (AY) 2010-11. The Revenue has raised the following grounds of appeal:- i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing deduction u/s 80IB of the Act amounting to ₹ 2,04,07,333/- by disallowing the partner s remuneration and interest on capital which is in contravention to the covenants laid down in the partnership deed. ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the partnership deduction clearly states that the interest and remuneration were payable to the partners and the partners as per their entitlements. iii) On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was re-opened by Assessing Officer on perusal of record, wherein it was noticed that the assessee without allowing interest on capital and remuneration to the partners claimed deduction under section 80IB(10). Deduction under section 80IB of the Act is allowable after excluding the interest and remuneration to the partners as per the partnership deed. The Assessing Officer was of the view that assessee claimed excess deduction. The assessee was liable to pay interest capital with the partners of ₹ 13,03,691/- and remuneration to the partners of Rss.1,92,16,836/- thereby total of ₹ 2.05 crores. The Assessing Officer after providng reasons recorded to the assessee proceeded for assessment. The Assessing Officer recorded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as interest free. The assessee also furnished the supplementary partnership deed dated 01.04.2008. The reply of the assessee was not accepted by Assessing Officer and held that the change in the partnership deed vide supplementary dated 01.04.2008 is not acceptable as the supplementary partnership deed was not produced during the course of assessment proceedings. Accordingly, the Assessing Officer disallowed the part claim of their remuneration bill thereby restricted to ₹ 2,37,90,313/- by disallowing of ₹ 2,04,07,333/-. 3. Aggrieved by the disallowance of Assessing Officer assessee carried matter before Ld. CIT(A). The assessee filed its detailed written submission. The detailed written submission of the assessee are rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. 5. On the other hand, Ld. AR of the assessee supported the order of Ld. CIT(A). The Ld. AR of the assessee submits that as per clause-21 of original partnership deed, the partners have option to amend the clause of partnership with the consent of the parties. The Supplementary deed was executed with the consent of majority of the partners of the assessee-firm vide supplementary deed dated 01.04.2008. 6. The Ld. AR of the assessee further submits that though the case of assessee for assessment year 2010-11 (the year under dispute) was re-opened on 05.03.2015 by recording reasons that assessee has not allowed interest and remuneration to the partners. A notice under section 148 of the Act was issued on 11.03.2015. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners and it is the right of the partners and not of the Assessing Officer to select and put in application of those options. The partners decided not to give any remuneration. On the interest to partner s capital, the assessee stated that it is privilege of the partners to change or amend the clause as agreed under the deed of partnership.Clause- 21 of the partnership deed provides such amendment. The assessee stated that the partnership was revised on 01.04.2008 i.e. much prior to the selection of return for scrutiny. The Assessing Officer disregarded the contention of the assessee and disallowed the part remuneration under section 80IB of the Act to the extent of ₹ 2,73,90,313/- thereby disallowed ₹ 2,04,07,333/-. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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