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TMI Blog2016 (8) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer that on the outstanding balance of the capital account of the partners, the firm had not provided any interest nor paid remuneration to the partners. Thus, the Assessing Officer gathered such information from the materials on record. There was no failure on the part of the assessee to disclose material facts. Respective notices for reopening issued beyond a period of four years are therefore, quashed. Both petitions are allowed and disposed of. - SPECIAL CIVIL APPLICATION NO. 18366 of 2014 TO SPECIAL CIVIL APPLICATION NO. 18367 of 2014 - - - Dated:- 2-8-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONE : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, the partners were eligible for interest on the balance of their capital account at the maximum rates permissible under section 40(b) (iv) of the Income Tax act, 1961 i.e. @ 12% per annum. The partnership deed also provided for paying of remuneration to the working partners as per section 40(b)(v) of the Act. On going through the office records, it is seen that the total balance in the capital accounts of the partners of the assessee firm for the year was ₹ 78,38,180/- . However, the firm had not provided for interest on the said capital balance, which amounts to ₹ 9,40,582/- . Further, remuneration of ₹ 15,07,254/- was also not provided. This has resulted into higher profit to the firm than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehta for the department opposed the petition contending that the Assessing Officer has recorded proper reasons. The assessee had artificially inflated profit of the eligible business. Such claim was required to be restricted. 5. In the partnership deed, with respect to interest on the partners' capital and remuneration to the partners, following provisions were made. (13) The interest may be paid on the credit capital balance of the partners in the partnership firm at the rate as may be mutually agreed upon by the partners from time to time which shall not exceed the maximum rate permissible under the provisions of the Income-tax Act. (14) The remuneration may be paid to the working partners of the partnership firm for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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