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TMI Blog2019 (9) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... O on account of non-provision of interest and remuneration from amount of deduction under section 80IA(10) read with section 10AA(9) of the Act. The issue is covered by the decision Co-ordinate Bench of ITAT, Surat in favour of the assessee in the case of Ruta Jewels [ 2018 (10) TMI 1686 - ITAT SURAT] and no reason to deviate with the finding of ld. CIT(A), accordingly same is upheld. Thus, the grounds of appeal of the Revenue are dismissed - I.T.A. No’s.192, 193/SRT/2017; 128 & 130/SRT/2018 - - - Dated:- 6-6-2019 - Shri Ram Lal Negi, Judicial Member And Shri O.P. Meena, Accountant Member For the Assessee : Shri Nitin Gheewala, CA And Shri Kushal Gheewala, CA For the Revenue : Shri Om Prakash Singh, CIT(DR) ORDER PER O.P.MEENA, AM: 1. These four appeals filed by the Revenue are directed against the separate orders of learned Commissioner of Income Tax (Appeals)-2, Surat (in short the CIT (A) ) dated 09.08.2017, 09.08.2017, 08.12.2017 05.12.2017 pertaining to Assessment Year 2012-13, 2011-12, 2014-15 2013-14 respectively. 2. The grounds raised by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2013) by ITAT Rajkot Branch, held that interest and remuneration to partners are allowable even though it has not been claimed in the partnership deed. The AO held that non-charging of the interest on the invested capital and no remunerations for the working partners has been done to enhance the profit of the appellant concern which is exempt from taxation and reduce the taxable income of the individual partners to same extent. The AO held that the partnership deed itself is a vehicle of collusive tax avoiding action and relying on the Meridian Impex (supra) calculated the payment of interest and remuneration of partners and the amount of ₹ 95,05,14,050/- wax excluded from the deduction u/s 10AA of the Act. The AO had restricted the claim of deduction u/s 80IA(10) to the tune of ₹ 53,03,75,790/- as against the total claim of deduction of ₹ 1,47,67,42,521/ under section 80IA(10) read with section 10AA(9) in respect of interest to partners and partners remuneration. 5. Being aggrieved, the assessee filed an appeal before the ld. CIT (A). Before whom, the assessee has submitted that the AO s finding is incorrect as it was clearly mentioned in the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controvert the facts that the issue is covered the decision of Tribunal in the case of ACIT, Circle-1(2), Surat Vs. Ruta Jewels for A.Y. 2013-14 in ITA No s.195/SRT/2017 205/SRT/2018 dated 26.10.2018. 7. On the other hand, the ld. Counsel for the assessee drew our attention of the first appellate order of paras 6.1.1 to 6.1.5 of the first appellate order and submitted that appellant has not charged any interest and remunerations as per the partnership deed and therefore, the appellant cannot be compelled to charge interest or remuneration and thus, the ld.CIT(A) was right in allowing appeal of the assessee by following various decisions including decision of Hon'ble Jurisdictional High Court of Gujarat in the case of Alidhara Taxspin Engineers, Tax Appeal No.265 of 2017 dated 02.05.2017 and orders of ITAT, Ahmedabad in the case of M/s. Sagar Foods and Shreeji Dehydrate Export, 2017 (3) TMI 1297 and in the case of M/s.AI Reza Food vs. ITO reported in (3) TMI 1237 (Ahd. Trib.). The ld. Counsel further submitted that the issue is covered by the decision of ITAT Surat in the case of ACIT, Circle- 1(2), Surat Vs. Ruta Jewels for A.Y. 2013-14 in ITA No s.195/SRT/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed does not provide any provision for payment of interest and remuneration to the partners. The main contention of the appellant is that the interest and remuneration of the partners are not claimed by the appellant as the same was not authorized by or is not in accordance with the terms of the partnership deed. The appellant has relied on the circular No.739 dated 25.03.1996 wherein the CBDT has clarified that no deduction 40(b)(v) of the Act will be admissible unless the partnership deed either specifies the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration. The clause of the Partnership Deed specifically restricts payment of Interest to Partners on their Capital as well as Remuneration to Partners. This is the main reason why the appellant has not claimed both the expenses against the Business Income shown in Income Tax Return. 6.1.3. The AO has mainly relied in the case of Meridian Impex (supra) to disallow the interest on capital partner remuneration but the facts in this case of Meridian Impex (supra) was different as there was the specific clause regarding the payment of interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, especially paras 6.1.3 6.1.4, we observe that the AO has relied on the order of ITAT, Rajkot 6.1.4, we observe that the AO has relied on the order of ITAT, Rajkot Bench in the case of Meridian Impex 37 taxmann.com 22 (2013) but the facts of the case are different from the facts and circumstances of the present case as in that case there was a specific loss in the partnership deed regarding payment of interest on capital and partner s remuneration in the original partnership deed submitted during scrutiny proceedings. Subsequently, a supplementary/addenda to said partnership deed was made amending the said clause providing the clause of non-payment of interest on capital and remuneration to the partners, which was not submitted before AO during assessment proceedings but in the present case undisputedly in the partnership deed there is no clause providing payment of interest on capital and remuneration to the partners therefore, the ld.CIT(A) was right in denying application of order of ITAT, Rajkot in favour of the Revenue in the present case having distinct and dissimilar facts and circumstances. 7. Further, from the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the case of Ruta Jewels (supra) and no reason to deviate with the finding of ld. CIT(A), accordingly same is upheld. Thus, the grounds of appeal of the Revenue are dismissed. We are unable to see any valid reason to interfere with the order of learned CIT (A) it and thus, we confirm the same. Accordingly, all grounds of appeal of the Revenue are dismissed. Now we will take up I.T.A.No s.193/SRT/2017, 128/SRT/2018 and 130/SRT/2018A.Y.2011-12, 2014-15, 2013-14 respectively. 11. Since the facts and circumstances in above ITA No.192/SRT/2017 for A.Y. 2012-13 are identical as of facts as in ITA No s.193/SRT/2017, 128/SRT/2018 and 130/SRT/2018, therefore, the reasoning and findings given A.Y. 2012-13 would mutatis-mutandis apply to these three appeals for the assessment years 2011-12, 2014-15 and 2013-14 also. Therefore, following the same, we dismiss the appeal of the Revenue in respect of all grounds of appeal. 12. In the result, the above Four captioned Appeals of the Revenue for the assessment year 2012-13, 2011-12, 2014-15 and 2013-14 are dismissed. 13. The order pronounced in the open court 06.06.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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