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TMI Blog2023 (8) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... ror apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record. We also noted that decision of case of Munjal Sales Corporation (supra) [ 2008 (2) TMI 19 - SUPREME COURT] relied upon by the ld. PCIT is not applicable inasmuch as the assessment year involved in this decision are assessment year 1993-94 to 1997-98 whereas Section 14A was introduced in the Statute by Finance Act 2001. Hon ble ITAT, Jaipur Bench in case of ASK Partners [ 2019 (1) TMI 877 - ITAT JAIPUR] has also held that payment of interest to the partners as per the provision of partnership deed is not subject to disallowance u/s 14A read with Rule 8D(ii) of the Act. Thus when the PCIT has taken a view and that view is in accordance with the decision of Hon ble ITAT Pune Bench and Jaipur Bench, it cannot be said that there is any mistake apparent on record. Assessee appeal allowed. - SHRI SANDEEP GOSAIN, JM SHRI RATHOD KAMLESH JAYANTBHAI, AM For the Appellant : Shri P.C. Parwal, CA For the Respondent : Shri Ajay Malik, CIT-DR ORDER PER: SANDEEP GOSAIN, JM This appeal of the assessee is directed against the order of the ld. PCIT, Jaipur-2 dated 31-05-2023 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interest paid to partners is an expenditure allowable u/s 36(1)(iii) by restricting the deduction as per provisions of section 40(b)(iv) of the Act. Hence a mistake apparent from record has crept in which is rectified by directing the AO to verify the same and decide as per law. 2.2 During the course of hearing, the ld. AR of the assessee prayed to quash the order of the ld. PCIT with the submissions that an issue which is deliberated and discussed in the order and thereafter a view has been taken on that issue, again taking another view on the same issue is not a mistake apparent on record but is a change of opinion. In the present case, on the issue as to whether interest paid to partners on their capital is to be considered for disallowance u/s 14A has been deliberated by the PCIT at Para 5.5(i) of its order as under:- Explanation of assessee regarding claim of finance cost of Rs. 10,85,82,853/- (correct amount Rs. 10,55,82,853/-) in the P L A/c is acceptable as this payment is a provision of interest on capital to partners and has no revenue impact because one side it is deductible expenses to the firm, on other side all the partners has included such income in their respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record. We also noted that decision of Hon ble Supreme Court in the case of Munjal Sales Corporation vs CIT (supra) relied upon by the ld. PCIT is not applicable inasmuch as the assessment year involved in this decision are assessment year 1993-94 to 1997-98 whereas Section 14A was introduced in the Statute by Finance Act 2001. This decision was concerned with the scope of Section 40(b)(iv) of the Act where also the Hon ble Supreme Court observed that conceptually partners capital is not loan or borrowing in the hands of Firm but for the purpose of restricting the disallowance of interest paid on the partners capital account in view of Section 40(b)(iv) of the Act, it held that under the scheme of Chapter IV-D that assessee has to prove that it was entitled to claim deduction for payment of interest on capital borrowed u/s 36(1)(iii) and not disentitled u/s 40(b)(iv) of the Act. Hence, the decision of Munjal Sales Corporation vs CIT (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble ITAT, Jaipur Bench in case of ASK Partners Vs. ACIT ITA No.187/JP/2017 order dt. 31.12.2018 (Case laws compilation PB 7-14) has also held that payment of interest to the partners as per the provision of partnership deed is not subject to disallowance u/s 14A read with Rule 8D(ii) of the Act. Thus when the PCIT has taken a view and that view is in accordance with the decision of Hon ble ITAT Pune Bench and Jaipur Bench, it cannot be said that there is any mistake apparent on record. Reliance in this connection is placed on the following cases:- T.S. Balaram, ITO Vs. Volkart Brothers and others [1971] 82 ITR 50 (SC) Hon ble Supreme Court at Para 4 of the order held as under:- 4. From what has been said above, it is clear that the question whether s. 17(1) of the Indian IT Act, 1922, was applicable to the case of the first respondent is not free from doubt. Therefore, the ITO was not justified in thinking that on that question there can be no two opinions. It was not open to the ITO to go into the true scope of the relevant provisions of the Act in a proceedings under s. 154 of the IT Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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