TaxTMI 
TaxTMI 
2022 (1) TMI 580
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....der the facts and circumstances the issue of allowability of deemed interest paid ' payable to the partners as per deed of partnership, is a highly debatable issue and outside the scope of provisions of Sec.154 of the l.T. Act. 3. That without prejudice, under the facts, no interest is to be allowed to the partners in terms of partnership deed read with the relevant law applicable on the subject, hence the findings of the A.C). in order u/s.154 are contrary to law and facts. 4. That without prejudice, the Ld. A.O. further erred in law and on merits in giving only part treatment to his action by treating Rs. 7,17,782/- separately as taxable income in the hands of assessee firm and thus by reducing the deduction u/s.80IC....
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....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 s....
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....e preceding year's and succeeding year's also assessee has not claim any deduction of interest on capital and has been accepted by Deptt. U/s 143(3)/143(1). Following documents are attached • Asstt. Order U/s 143(3) for AY 2013-14 • Balance sheet for A.Y. 2013-14 • Profit & Loss A/c for A.Y. 2013-14 D. Further without prejudice interestingly Ld. A.O. has held that interest on capital of Rs. 7,17,782/- is to allowed and deduction U/s 80IC is to be disallowed to this extent. However, in the income computation portion A.O has not reduced the profits but only disallowed the deduction U/s. 80IC correctly for argument stake only, if the version of the A.O. is to accepted then profits and consequenti....
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....it. 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 never paid to the partners nor reflected by the partners as their income. 5. Now the assessee is in appeal. 6. Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and further submitted that in the preceding year as well as succeeding year no such action of rectification was taken by the A.O. even when no interest was provided to the partners on their capital. It was further submitted that the issue relating to the providing of interest on the capital of the partners was a debatable, as the department has approved the act....
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....f agreement only between the partners. Moreover the Hon'ble Apex Court noted that the assessees in the said case wanted 100% deduction without taking into consideration the depreciation which they wanted to utilize in the subsequent years, however the interest on capital if forgone in this year cannot be claimed in subsequent years, 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 ded....