TMI Blog2021 (11) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit of the assessee - HELD THAT:- CIT(A) while granting relief to the assessee followed the decision of Alidhra Taxspin Engineers [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT ] wherein it was held that mere incorporation of interest on partner s account and remuneration does not signify that same are mandatory in nature CIT(A) also considered the CBDT s Circular No.739 of 1996 dated 25.03.1996 wherein it has been clarified that no deduction under section 40(b)(v) of the Act is admissible under partnership deed either specified the amount of remuneration payable to each individual working partners or laid down the manner quantify of such remuneration. In the present case, the clauses of partnership deed specifically restrict not to cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and remuneration to the partners, the firm has claimed higher profits leading to higher claim of deduction u/s 10AA of the Act and thus, devoiding the revenue from due amount of tax? 2. Brief facts of the case are that assessee is a partnership firm engaged in manufacturing and export of diamonds studded jewellery in Special Economic Zone (SEZ). The assessee filed its return of income for AY 2013-14 on 07.09.2013 declaring nil income. In the computation of income, the assessee claimed deduction under section 10AA of the Income Tax Act, 1961 (in short the Act ) of ₹ 3.37 crores. On perusal of record, the Assessing Officer noted that assessee has not claimed interest on capital contribution and remuneration to its partners from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4867323/- 392238/- Smt. Neeeta N Lukhi 4867323/- 852867/- Total A+B = 2087631/- 3. The A.O. thereby restricted the eligible deduction to the extent of ₹ 1,28,29,529/-. Aggrieved by the disallowance on account of partners remuneration and interest on capital contribution the assessee field appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee made detailed written submission. Detailed written submission of the assessee is recorded in para-5 of the order of Ld. CIT(A). In the written submission, the assessee stated that assessee is deriving income from manufacturing acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risdictional High Court in the case of Pr. Commissioner of income Tax vs. Alidhra Taxspin Engineers Tax Appeal No.265 of 2017 dated 02.05.2017, wherein it was held merely incorporation of interest on partners capital account and remuneration does not signify that same are in mandatory in nature. The Ld. CIT(A) also relied upon the order of ITAT Ahmedabad Benches in the case of M/s Al Reza Food vs. ITO Ward-2(4) Bhavnagar 2017 (3) TMI 1237 ITAT Ahmedabad and directed the Assessing Officer to delete the disallowance made by the Assessing Officer for restricting the claim under section 10AA of the Act. aggrieved by the order of Ld. CIT(A) the Revenue has filed appeal before the Tribunal. 4. We have heard the submissions of Ld. Senior D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning. What is the only prohibition is avoidance of tax and not tax planning. The assessee has not avoided any tax rather made tax planning, which is permissible under law. Further no tax can be levied without the authority of law as mandated by Article 265 of the Constitution of India. The Ld. AR for the assessee submits that grounds of appeal raised by Revenue is in fact covered by the decision of Hon'ble jurisdictional High Court in the case of Alidhra Taxspin Engineers (supra) which is followed by Ld. CIT(A) while granting relief to the assessee. 6. We have considered the submission of both the parties and have gone through the orders of authorities below. The assessee claimed deduction of ₹ 3.37 Crore under section 10AA. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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