2017 (4) TMI 1663

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....bed and heard together and, therefore, for the sake of convenience, a common order is passed. 2. Briefly the facts of the case are that in the assessment orders, the Assessing Officer mentioned that for the assessment years 2002- 03, 2003-04 and 2004-05, the assessee claimed interest on partners' loan accounts, for the AY 2002-03, assessee had claimed interest of Rs.16,20,000/-. The claim made by the assessee towards interest on partners' loan accounts was considered for disallowance in the assessment made for the A.Ys. 2002-03, 2003-04 and 2004-05, The said disallowance has been upheld by the CIT(A) for the asst. year 2001-02. The assessee submitted that, in its own case for the asst. year 2001-02, the Hon'ble Tribunal in th....

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....s of the property since their shares are not definite and ascertainable and as such the income cannot be assessed in the hands of the partners i.e. the so called co-owners, under the provisions of Sec.26 of the I. T. Act. Accordingly, the disallowance of interest on partners' loan at Rs.16,20,000/- was added to the income returned for the A.Ys. 2002-03. 3. Aggrieved by the orders of AO, the assessee preferred appeals before the CIT(A) and submitted before the CIT(A) that the issue is covered by the decision of the ITAT in assessee's own case for AY 2001-02 in ITA No. 418/Hyd/2004, dated 22/06/2005. 4. The CIT(A) referring to the findings of the ITAT in its order in AY 2001-02, held as under: "That is to say that the Tribu....

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....rest paid to partners is disallowed amounting to Rs.16,20,000/- 3. The learned Commissioner ought to have followed the order of the Hon'ble ITAT in the assessee's own case for the assessment year 2001-02, wherein, the Hon'ble ITAT directed the Assessing Officer to make the assessment by applying section 26 of the IT Act and to assess the income in the hands of each of the co-owner. 4. The learned Commissioner ought to have appreciated that the Hon'ble ITAT following the order of the Hon'ble AP High Court held that there cannot be any firm in existence in the absence of business, therefore, directed the income to be assessed according to the provisions of section 26 of the IT Act. 5. The appella....