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TMI Blog2022 (1) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... owable as deduction under section 80IC of the Act. Therefore in the present case the whole of the profit worked out by the A.O. at 15,21,957/- was to be allowed as deduction under section 80IC of the Act and no addition was called for. As regards to the case law relied by the Ld. CIT(A) in the case of Plastiblends India Ltd.[ 2017 (10) TMI 423 - SUPREME COURT] is concerned, it was distinguishable on facts. Since in the said case the assessee manipulated the profit by not charging the depreciation under section 32 of the Act and carry forwarded the said depreciation to be adjusted in the subsequent years. However in the present case the interest on the capital of the partners, if any, was not allowed to be carry forward in the subsequent years, if not charged in the year under consideration. Therefore the said case law relied by the Ld. CIT(A) was on different fact. A.O. wrongly treated the income as taxable in the hands of the assessee and the Ld. CIT(A) was not justified in upholding the action of the A.O. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as there was no change in the manufacturing as well as trading activity of the assessee. 3.2 The A.O. also observed while framing the assessment under section 143(3) of the Act vide order dt. 05/03/2015 that the assessee was having three partners namely Smt. Sonia Sahni, Smt. Archana Sahni and Smt. Pooja having equal share i.e; 33.33% each. The A.O. accepted trading results shown by the assessee which were verified with reference to the books of account and assessed the income returned at NIL. Thereafter the A.O. invoked the provisions of Section 154 of the Act and observed that the partners of the assessee were entitled to get interest @ 12% on their capital in terms of the partnership deed but no interest to the partners had been given and debited in the P&L Account on their credit balances of capital during the year relevant to the assessment year under consideration. The A.O. worked out the said interest @ 12% on the credit balances of capital of the partners as on 01/04/2011, at ₹ 7,17,782/-. The A.O. held that the aforesaid amount of ₹ 7,17,782/- was liable to be reduced from the deduction claimed under section 80IC of the Act. The A.O. computed the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increased/decreased by the partners from time to time with mutual consent. 14. That the partners will also be entitled to charge interest on the opening balance of capital as standing in their credit on the first day of April & 12% per annum." 4.2 The Ld. CIT(A) on the basis of the provision in the aforesaid clauses observed that the salary payable to each of the partners may be increased or decreased by mutual consent while there is no such similar wording in the clause pertaining to payment of interest on the credit balances of the partners, therefore the contention of the assessee that the payment of interest was not mandatory was not based on correct facts. The Ld. CIT(A) referred to the decision of the Hon'ble Apex Court in the case of Plastibends India Ltd. Vs. Additional Commissioner of Income Tax, Mumbai [2017] 86 taxmann.com 137(SC) wherein the issue relating to deduction of depreciation which they wanted to utilize in the subsequent years was directed to be reduced from the profit. The Ld. CIT(A) upheld the action of the A.O. and did not accept this contention of the assessee that the income should also be recomputed, for the reason that the interest was ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, therefore the case law relied by the Ld. CIT(A) was distinguishable on fact. 7. In her rival submissions the Ld. DR reiterated the observations made by the Ld. CIT(A) and strongly supported the impugned order. It was further submitted that the issue relating to non charging of the interest in the earlier and subsequent years was to be verified by the A.O. It was stated that the assessee claimed higher deduction under section 80IC of the Act by increasing the profit, therefore, the A.O. rightly considered the amount of ₹ 7,17,782/- as taxable particularly when this income as interest was not shown by the partners in their individual hand. 8. I have considered the submissions of both the parties and perused the material available on the record. In the present case it is not in dispute that the A.O. framed the original assessment under section 143(3) of the act vide order dt. 05/03/2015 after verifying the books of account vis a vis the bills & vouchers produced by the assessee. The A.O. allowed the deduction under section 80IC on the eligible profit of the industrial undertaking, the A.O. invoked the provisions of section 154 of the Act and reduced the deduction under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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