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TMI Blog2023 (12) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... terest and obtained benefit to that extent. In view of the above, the petition u/s. 264 of the assessee considered devoid of any merit and hereby rejected. Therefore, there is no scope for interfering with the Impugned Order in the present writ petition. - Honourable Mr. Justice C. Saravanan For the Petitioner : Mr.T.Vasudevan For the Respondents : Dr.B.Ramaswamy Senior Standing Counsel ORDER The petitioner is aggrieved by the impugned order dated 28.03.2023 bearing C.No.264/PCIT-8/264/2021-22/08, passed by the 1st respondent - Principal Commissioner of Income Tax-8, Chennai 600 006 under Section 264 of the Income Tax Act, 1961. (Hereinafter referred to as 'the Act'). 2. By the impugned order, the 1st res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , commission or remuneration by whatever name called or any part thereof has not been allowed to be deducted under clause (b) of Section 40, the income under this clause has to be adjusted to the extent of the amount not so allowed to be deducted. 4. In other words, it is the contention of the petitioner that the amount of Rs. 11,90,315/- out of Rs. 23,80,631/- which was added to the income of the petitioner in the re-assessment order dated 30.12.2019 has to be deleted and therefore, the re-assessment made has to be revised under Section 264 of the Income Tax Act, 1961. 5. It is submitted that the very purpose of the providing the proviso to Sub-Clause (v) to Section 28 of the Income Tax Act, 1961 has been defeated vide impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Counsel for the respondents. 10. The petitioner is a proprietor of M/s. Raja Co. and the partner of M/s. Selvam Motors. The petitioner had received a sum of Rs. 3,60,000/- as salary from the said firm and a sum of Rs. 23,80,631/- as interest on capital ploughed by the petitioner in the said firm. 11. As per Section 28(v) of the Income Tax Act, 1961 any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from such firm shall be chargeable to income-tax under Profits and Gains of Business or Profession. 12. Section 28(v) of the Income Tax Act, 1961 reads as under:- any interest, salary, bonus, commission or remuneration, by whatever name called, due to, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest to any partner, which, in either case, is not authorised by, or is not in accordance with, the terms of the partnership deed; or (iii) any payment of remuneration to any partner who is a working partner, or of interest to any partner, which, in either case, is authorised by, and is in accordance with, the terms of the partnership deed, but which relates to any period (falling prior to the date of such partnership deed) for which such payment was not authorised by, or is not in accordance with, any earlier partnership deed, so, however, that the period of authorisation for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed; or (iv) any payment of interest t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 51,26,155/-. While computing the net taxable income , the petitioner claimed a deduction of Rs. 23,80,631/- being the interest paid on capital by the said Partnership firm namely M/s.Selvam Motors, purportedly under proviso to Sub-Clause (v) to Section 28 of the Income Tax Act, 1961. 16 . The assessment of the petitioner was completed on 30.11.2016 by accepting Return of Income filed by the petitioner on 30.11.2014. The assessment was however reopened under Section 148 of the Income Tax Act, 1961 for the purpose of Section 147 of the Income Tax Act, 1961. 17. The said proceedings culminated in an assessment order dated 13.12.2019 under Section 147 read with 143(3) of the Income Tax Act, 1961, whereby part of the amount which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. The appeal of the petitioner before the Commissioner of Income Tax (Appeals) against order dated 30.12.2019 passed under Section 143(3) read with 147 of the Act was also dismissed as infructuous on 16.11.2021 as the petitioner has settled the dispute under the Vivad Se Vishwas Scheme (VSVS). 23. Under the Income Tax Act, the firm and the individual partners are different entities. The disallowance of expenditure in the case of one entity does not entitle the other entity (recipient) to claim deduction of the disallowed expenditure. In this case assessee has actually received interest of Rs. 23,80,631/- and obtained benefit to that extent. In view of the above, the petition u/s. 264 of the assessee considered devoid of any merit and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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