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TMI Blog2024 (1) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... s law on the subject, the learned A.O. erred in disallowing U/s 10AA of the Act of Rs. 4,38,44,221/- even though supplementary deed of the appellant firm specifically provided that no interest and remuneration payable to partners. 4. On the facts and circumstances of the case as well as law on the subject, the learned A.O. erred in thrusting the interest on Partner's capital and remuneration to partners, even though it was not prescribed by the partnership deed and thus not even by law. 5. On the facts and circumstances of the case as well as law on the subject, the learned A.O. erred in treating income of Rs. 19,178/- on payment of employees contribution of PF/ESI after due date. 5. The appellant craves to leave, to add, to amend and/or alter any of the ground of appeal, if need be." 2. Perusal of record shows that the impugned order was passed by the ld. CIT(A) on 20/02/2023, however, the present appeal is filed before the Tribunal on 29/05/2023. The Registry of this Tribunal has calculated the delay of 38 days in filing appeal. The assessee has filed application for condonation of delay which is supported by the affidavit of Shri Dinesh Malani, partner of assessee-firm. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0AA of the Act of Rs. 7.61 crores. The case was selected for complete scrutiny. During the assessment, the Assessing Officer noted that the partner of assessee firm has not claimed interest on capital contribution and remuneration to its partners. The Assessing Officer issued show cause notice that why the assessee has not claimed such allowable expenditure while claiming profit from eligible business, vide show cause notice dated 15/11/2019. The contents of show cause notice is recorded in para 3 of assessment order. In the show cause notice, the Assessing Officer mentioned that on verification of partnership deed dated 05/12/2013 wherein as per clause (5) of partnership deed, interest to the partners is payable @ 12% per annum. Further as per clause (6) of partnership deed, remuneration is also payable as per calculation of Section 40B of the Act. The assessee subsequently prepared a supplementary deed dated 19/06/2014 and clause related to interest and remuneration to partners was omitted. This was done with the intention to increase the exempt income. The Assessing Officer on the basis of original partnership deed dated 05/12/2013 worked out the remuneration and interest on cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t/2012 dated 24/01/2013 and Chandigarh Tribunal in ITO Vs M/s Shivam Industries ITA No. 510/Ahd/2012 and 616/Chd/2012. Further aggrieved, the assessee has filed present appeal before the Tribunal. 10. We have heard the submissions of ld. AR of the assessee and the ld. CIT-DR for the revenue. The ld. AR of the assessee submits that the grounds of appeal raised by assessee are covered by the decision of Hon'ble Jurisdictional High Court in PCIT Vs. Alidhra Taxspin Engineers and another (supra) and in PCIT Vs Ruta Jewels in Tax Appeal No. 165 of 2019 dated 24/06/2019. The ld. AR of the assessee submits that the Hon'ble Jurisdictional High Court in PCIT Vs. Alidhra Taxspin Engineers and another (supra) made specific finding that mere incorporation of interest on partners' capital account and remuneration does not signify that the same are mandatory in nature. Once the assessee has not charged any interest and remuneration as per partnership deed, therefore, the assessee cannot be compelled to charge interest or remuneration. The ld. AR of the assessee submits that the case is on better footing that the partner of assessee firm has agreed vide supplementary partnership deed dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs M/s Shivam Industries ITA No. 510/Ahd/2012 and 616/Chd/2012. 13. Before us, the ld. AR of the assessee vehemently relied upon the decision of Jurisdictional Tribunal as well as Jurisdictional High Court. The assessee also claimed that similar relief was claimed in A.Y. 2016- 17 on the basis of supplementary partnership deed and the assessee was allowed similar deduction without disallowance of similar interest on partners' contribution and remuneration. The assessee has also filed copy of intimation under Section 143(1) wherein claim of deduction under Section 10AA of the Act of Rs. 5.49 crore was allowed. The assessee has not charged any interest or remuneration as per their partnership deed, the assessee firm cannot be compelled to charge interest or remuneration. We find that the facts of present case is on better footing. The partner of assessee firm vide their supplementary partnership deed 19/06/2014 agreed not to charge any interest on their capital contribution and any remuneration to them. 14. We find that the grounds of appeal raised by assessee is covered by the decision of Hon'ble Jurisdictional High Court in PCIT Vs. Alidhra Taxspin Engineers and another (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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