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TMI Blog2012 (12) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in view of the compliance of furnishing the Partnership Deed during the course of assessment proceedings, the requirements of Sec. 184(4) were duly complied with and hence the disallowance of salary and interest paid to partners was patently wrong. It be so held now and the salary and interest paid to the partners be allowed as claimed. 2. The learned C.IT.(Appeals) erred both in law and on facts in confirming the erroneous action of the Assessing Officer of making the disallowance of Rs.24,23,085/-. The expenses of Hire charges of Trucks amounting to Rs.24,23,085/- was genuinely incurred by the appellant wholly and exclusively for the purpose of business. It is submitted that the appellant having incurred the expenditure of Rs. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessee was required to file certified true copies of the reconstituted partnership deed along with the return of income as required u/s 184(4) of the Income tax Act, 1961. He further noted that as per Section 185 of the Income tax Act, 1961, no deduction by way of any payment of interest, bonus, commission and remuneration whatsoever nature called made by a firm to a partner of the firm which has not fulfilled conditions laid down in Subsection (4) of Section 184 of the Income tax Act, 1961 should be allowed. In this manner, the A.O. made disallowance ofRs.4,08,653/- in respect of the partners' interest expenditure and partners' salary expenditure. Being aggrieved the assessee carried the matter in appeal before Ld. CIT(A) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue in favour of the assessee and the relevant pars of this tribunal order is para 5 which is reproduced below: "5. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. We find that the assessee filed return of income during the year together with copy of partnership deed certified by one partner and not by both the partners of the firm. The A O assessed the income u/s 143(3) at a loss of Rs.7,00,736/-. Thereafter, the A O reopened the assessment by issue of notice u/s 148 of the Act and assessed the income of the assessee firm in the status of A O P and disallowed payment of interest made to the partners of Rs.1,81 ,877/- and also disallowed carry forward of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners. Hence, the facts in the present case are similar to the facts of this case and hence, by respectfully following the Tribunal decision, we hold that the payment of interest and salary to the partners is to be allowed since the certified copy of the partnership deed was made available to the A.O. in the course of assessment proceedings and it was held by the tribunal in the case cited by the Ld. A.R. that this defect of not filing copy of partnership deed with return of income is a curable defect. It is also held by the Tribunal that the provisions of Section 184 of the Income tax Act, 1961 are directory and not mandatory as held by Hon'ble Gujarat High Court in the case of Billimora Engineering Mart Vs CIT as reported in 156 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. 8. It is submitted by the Ld. A.R. before us that there is genuine sale and lease back transaction regarding vehicles in question sold by the assessee to these three persons on the 1st day of April 2004 and the sale deed of these three vehicles are available on pages 63-65 of the paper book. He also submitted that on pages 53-58 of the paper book are the copies of the application made by these sub-contractors to the respective A.O.s in Form 13C to obtain the certificate for not deducting TDS and such certificates u/s 197(1) of the Income tax Act, 1961 were issued by the A.O. to these sub-contractors on 23.04.2004 and hence, it cannot be said that this transaction of sale and lease back is an afterthought. He submitted that in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold by the assessee and were taken on hire, by the assessee from these three persons, then there is no reason of debiting these expenditure in respect of these three vehicles in the books of the assessee firm for the expenditure of tax, diesel and oil expenses, vehicle insurance, RTO payment, calibration expense and repairing expenses etc. Since the assessee has already debited all these expense in respect of these vehicles in its books of account, no further deduction is allowable to the assessee on account of hiring of these tankers. But we find force in this contention that all operating expenses of these three tankers should be allowed as deduction to the assessee. We, therefore, set aside the order of Ld. CIT(A) and restore the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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