Tribunal upholds reassessment, disallows partners' remuneration, remands interest computation.

The Tribunal upheld the reassessment proceedings and the disallowance of partners' remuneration but remanded the issue of interest computation u/s 234B back to the Assessing Officer for reconsideration. The appeal was partly allowed for statistical purposes.

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Issues Involved:
1. Validity of initiation of reassessment proceedings u/s 147/148 of the Income Tax Act, 1961.
2. Non-allowance of Partners' Remuneration u/s 40(b) of the Income Tax Act, 1961.
3. Non-consideration of the payment of advance tax paid by the partners on the Partners' Remuneration while computing interest u/s 234B read with section 155(1A) of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of Initiation of Reassessment Proceedings u/s 147/148:
The appellant contested the initiation of reassessment proceedings, arguing that the reasons for reopening were communicated after the limitation period. The notice u/s 148 was issued on 20th January 2010, and the reasons were provided on 8th August 2011. The appellant claimed this delay invalidated the reassessment. However, the Tribunal found that the outer limit for issuing notice u/s 148 for the Assessment Year 2006-07 would expire on 31.03.2013. The reasons recorded by the previous Assessing Officer were deemed valid, and the reassessment proceedings were upheld based on the precedent set by the Hon'ble Delhi High Court in the case of A.G. Holdings Pvt. Ltd., where a delay in supplying reasons did not invalidate the reassessment. The Tribunal dismissed this ground of appeal and confirmed the order of the CIT(A).

2. Non-Allowance of Partners' Remuneration u/s 40(b):
The Tribunal referred to the Hon'ble Jurisdictional High Court's decision in the assessee's own case for the Assessment Year 2007-08. The High Court had held that the partnership deed must specify the quantum or manner of computing the remuneration. The partnership deed in question did not meet this requirement as it left the remuneration to be mutually agreed upon in the future. The Tribunal agreed with the CIT(A) and dismissed this ground of appeal, confirming that the disallowance of partners' remuneration was in accordance with the law.

3. Non-Consideration of Payment of Advance Tax Paid by Partners:
The appellant argued that the advance tax paid by the partners on their remuneration should be considered while computing interest u/s 234B. The Tribunal noted that the CIT(A) had not adjudicated this issue, stating it was consequential. The Tribunal acknowledged the provisions of section 155(1A), which allow for the adjustment of the partner's income in case of disallowance of remuneration. The Tribunal set aside this issue back to the Assessing Officer to amend the partner's assessment and reconsider the interest chargeable u/s 234B, taking into account the advance tax paid by the partners. The Tribunal directed the Assessing Officer to grant sufficient opportunity to the assessee before passing the order.

Conclusion:
The appeal was partly allowed for statistical purposes. The Tribunal upheld the reassessment proceedings and the disallowance of partners' remuneration but remanded the issue of interest computation u/s 234B back to the Assessing Officer for reconsideration.

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