O/TAXAP/265/2017 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 265 of 2017 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India or any order made thereunder? PR. COMMISSIONER OF INCOME TAX....Appellant(s) Versus ALIDHRA TAXSPIN ENGINEERS & 1....Opponent(s) Appearance: MR SUDHIR M MEHTA, ADVOCATE for Appellant(s) No. 1 CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE B.N. KARIA Date : 02/05/2017 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 4 HC-NIC Page 1 of 4 Created On Sat May 06 10:07:03 IST 2017 O/TAXAP/265/2017 JUDGMENT [1.0] Feeling aggrieved and dissatisfied with impugned judgment and order passed by learned Income Tax Appellate Tribunal, Ahmedabad B Bench (hereinafter referred to as learned tribunal ) dated 03/05/206 in ITA No.198/Ahd/2016 for Assessment Year 2010-11 by which learned tribunal has partly allowed said Appeal preferred by assessee and has deleted disallowance made by Assessing Officer disallowing deduction made under Section 80IB of Income Tax Act, revenue has preferred present Appeal with following proposed questions of law; (A) Whether on facts and circumstances of case and in law, Hon ble ITAT was justified in not appreciating fact that by not providing interest and remuneration to partners, firm has claimed higher profits leading to higher claim of deduction u/s 80IB of Act and thus, devoiding revenue from due amount of tax? (B) Whether on facts and circumstances of case and in law, Hon ble ITAT was justified in not appreciating that Section 80IB (10) enables AO to re-compute profit of undertaking claiming deduction u/s 80IB i.e. partnership firm as in present case and not case of partner s admissibility towards interest/ remuneration as held in case of Smt. Mala Tandon? [2.0] We have heard Shri Sudhir Mehta, learned advocate Page 2 of 4 HC-NIC Page 2 of 4 Created On Sat May 06 10:07:03 IST 2017 O/TAXAP/265/2017 JUDGMENT appearing on behalf of appellant revenue. [3.0] respondent assessee, partnership firm consisting of four partners, filed return of income for Assessment Year 2010-11. respondent assessee firm declared total income of Rs.25,06,56,700/- after claiming deduction of Rs.6,48,19,921/-. case was selected for scrutiny. At end of scrutiny assessment, Assessing Officer passed order assessing total income at Rs.25,10,76,76,110/- after disallowance out of deduction claimed under Section 80IB of Income Tax Act to tune of Rs.6,44,00,404/-. It appears that Assessing Officer made disallowance of deduction claimed under Section 80IB of Income Tax Act on ground that in partnership agreement there was no provision of interest and remuneration to be paid to partners, and therefore, it resulted into claim of higher profit under Section 80IB of Income Tax Act. On Appeal preferred by assessee learned CIT(A) confirmed disallowance made by Assessing Officer with respect to deduction claimed under Section 80IB of Income Tax Act. On further Appeal by assessee, learned tribunal by impugned judgment and order partly allowed said Appeal and deleted disallowance made by Assessing Officer out of deduction claimed under Section 80IB of Income Tax Act to tune of Rs.6,44,00,504/-. Being aggrieved and dissatisfied with impugned judgment and order passed by learned tribunal, revenue has preferred present Tax Appeal with aforestated proposed questions of law. Page 3 of 4 HC-NIC Page 3 of 4 Created On Sat May 06 10:07:03 IST 2017 O/TAXAP/265/2017 JUDGMENT [4.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of revenue. On interpretation of partnership agreement and considering wish of partners reflected in partnership deed, not to pay /charge interest on partners capital and remuneration, learned tribunal has rightly deleted disallowance made by Assessing Officer with respect to deduction claimed under Section 80IB of Income Tax Act. As rightly observed by learned tribunal, mere incorporation of interest on partners capital and remuneration does not signify that same are mandatory in nature. We concur with view taken by learned tribunal. We see no reason to interfere with impugned judgment and order passed by learned tribunal. No substantial questions of law arise in present Tax Appeal. present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R. SHAH, J.) (B.N. KARIA, J.) Siji Page 4 of 4 HC-NIC Page 4 of 4 Created On Sat May 06 10:07:03 IST 2017 Pr. Commissioner of Income-tax v. Alidhra Taxspin Engineers & 1