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TMI Blog2021 (3) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... that, the assessee had claimed excessive deductions under Section 80 IB(10) of the Act, without providing interest on capital and remunerations to the partners for the respective years under consideration, which had escaped assessment. 3. The brief facts giving rise to filing the present writ applications are as follows: 3.1 The writ applicant - My Home Developers is a partnership firm engaged in the activity of developing housing projects. The firm came into existence with effect from 15.06.2007 and partnership deed was executed among the partners on 27.06.2007 which contained a clause as to payment of interest on capital, but no remuneration was payable. Thereafter, due to change in the constitution in the partnership firm, another partnership deed was executed on 01.04.2008, which contained a clause as to payment of interest on capital, but no remuneration was payable at all. The said partnership deed was amended and it was mutually agreed upon that w.e.f 01.04.2009, no interest shall be payable to the partners on capital. 3.2 The case of the writ applicant for the assessment year 201011 was selected for scrutiny assessment and assessment under Section 143 of the Act was fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder assessment of Rs. 7,60,385/- which has escaped assessment on account of failure on the part of the assessee in filing of return of income disclosing fully and truly all necessary material facts." 4.2 SCA No. 208 50 /2018 :- The writ applicant filed its return of income for A.Y. 201 2 -1 3 on 29.09.2012 declaring total income of Rs. Nil after claiming deduction of Rs. 15,78,260/- under Section 80 IB (10 ) of the Act. In response to the notice issued under Section 148 of the Act, the writ applicant filed its return of income for the year under consideration on 14.04.2018 and at the request of the writ applicant, reasons recorded have been furnished to the writ applicant which reads as under: "3. On further verification of partnership deed executed on 23.01.2008, the clauses 6 & 7 provided payment of interest to partners @ 12% on capital and payment of remuneration to working partners as per eligibility u/s. 40 (b) of the I.T.Act 4. In the case of assessee, the remuneration should be payable for 12 months I..e from 01.04.2012 to 31.03.2013 and interest on capital also payable as per partnership deed but the same was not paid as per partnership deed. 5. As the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raval, the learned Standing Counsel appearing for the Revenue. 8. Learned counsel appearing for the writ applicant has submitted the following contentions : (i) It was submitted that, the revenue is not justified in re-opening the assessment proceedings on the grounds as assigned in the reasons. He submitted that, the revenue has failed to appreciate the partnership deeds in correct prospective. Referring to the partnership deeds, he submitted that, the original partnership deed contained a clause for providing interest on capital to partners, whereas, the amended partnership deed contained a clause as to non-payment of interest. In this background facts, it was submitted that, merely a clause for providing for interest and remuneration to the partners in the original partnership deed, it does not signify that, the interest and the remuneration is to be paid to the partners mandatorily. In support of this contention, relying upon the decision of this Court in the case of PCIT Vs. Alidhara Taxspin Engineers [Tax Appeal No.265/2017, decided on 22.05.2017], it was submitted that, in the absence of material on record to indicate that, partners actually received interest on capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned notices under Section 148 of the Act to re-open the assessment, as in the instant case, no scrutiny assessment was made under Section 143 (3) of the Act. Referring to the clause 6 and 7 of the Partnership Deeds executed on 23.01.2008, it was submitted that, there was a provision for payment of interest to the partners at the rate of 12 % on capital and payment of remuneration to working partners as per Section 40(b) of the Act. In that view of the matter, the Assessing Officer has reason to believe that, the assessee has claimed deduction excessively which has resulted in escape of income chargeable to tax due to failure on the part of the assessee to disclose true particulars of the income. 10. In view of the contentions raised by the Revenue, Mrs. Kalpana Raval, prays that, there being no merits in the writ applications, the same may be rejected. 11. We have heard the learned counsel appearing for the respective parties and perused the material placed on record. 12. It is settled law that, the Assessing Officer has power to reassess any income with escaped assessment for any assessment year subject to provision of the Act. However, the use of this power is conditional up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as well as interest will be payable at reduced rate, if after paying interest, Partnership Firm incur Loss. 7. REMUNERATION The parties hereto agreed that, at present no remuneration shall be payable to any partner of the Firm. The partners shall be at liberty to pay remuneration to one or more partners, as may be agreed upon time to time by and between all the parties hereto, under the provisions of Income Tax, as may be in force for the Income Tax Assessment of the partnership Firm for the relevant accounting period. 15. Clause 6 of the amended partnership deed dated 01.04.2009 reads thus: "Clause 6- The parties here to agreed that, at present no interest shall be payable to partners of the firm on the amount standing to the credit of the capital account or current account of the partners." 16. At this stage, it is apt to refer to and rely upon the case of Alidhara TaxSpin (supra), wherein identical issue of law was decided. The two questions of law raised by the revenue and the final conclusion arrived at by this Court reads thus : "(A) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in not appreciating the fact that by n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on capital as well as the remuneration were not to be paid to the partners. We do not find any material on record to indicate that, the writ applicant has actually received any interest on capital and remuneration from the partnership firm. Record further indicates that, for the assessment year 2010-11, deduction under Section 80 IB(10) was claimed without paying any interest on capital and remuneration to partners and such claim was not disturbed by the assessing officer. In this view of the matter, the conclusion arrived at by the assessing officer that, the assessee has claimed deduction without providing interest on capital and remuneration to partners as per the clause 6 and 7 of the deed, has escaped assessment on account of failure on the part of the assessee in filing of the return of income disclosing fully and truly all material facts are contrary to law and without jurisdiction. 19. Having regard to the materials on record, we hold that, the contention raised by learned Sr. counsel Mr. Hemani merits consideration that mere incorporation of clauses in the partnership deed for interest on the partner's capital and remuneration, does not signify that, interest and remuner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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