Commissioner Of Income Tax-I,Ludhiana v. Mis. Laljit Hosiery, Ludhiana

! ~ l-e:::;:)0U:t:-C):t:«z~0:=«J:cz«en<C~z::)c.. IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH., Income Tax Appeal No. 167 of 2011Date.of decision: 7.7.2011 .' Commissioner of Income Tax-I,ludhiana.. --- Appellant Versus MIs. laljit Hosiery, ludhiana --- Respondent CORAM:HON'BlEMR. JUSTICE ADARSH KUMAR GOElACTING CHIEF JUSTICE HON'BlEMR. JUSTICE AJAY KUMAR MITTAl Present:Mr. Rajesh Katoch, Standing Counsel. forthe appellant-Revenue.. forthe appellant-Revenue. AJAY KUMAR MITTAL. J. , . This appealunder Section260A of the Income-TaxAct,1961 (for short "the Act") has been filed by the R,evenue against theorder dated 29.7.2010, passed by the Income Tax Appellate TribunaliChandigarh Bench 'A', Chandigarh (in short "the Tribu~al")I in ITA No...I"149/CHANDII2010, relating'to the assessmentyear 2005-06..~2.The following substantialquestionsof law have' beenclaimed for determination of this Court:"(i)Whether on the facts and in law, the Hon'ble Income TaxAppellateTribunal haschallengedtheconstitutionalvalidity of the provisions of Section 184(4) of the IncomeTaxAct,1961by holdingthattherequirementof fl. I I-a::::J0(.):I:-C).J:<Cz >!:a:=<C:I:Cz<Cen<C~Z:J.0. Income Tax Appeal No. 167 of 2011 furnishingcertifiedcopy of partnershipdeedalong ~iththe return of incomeis directoryand not mandatOf:Y innature when the section 184(4) clearly states that "W~ereany such change had taken place in the previousyear,thefirmshallfurnisha certifiedcopyoftherevisedinstrumentof partnershipalong with the return of incomefor the assessmentyear relevantto such previousyearandalltheprovisionsofthissectionshallapplyaccordingly. " (ii) (ii)Whetheron the f?cts and in law, the Hon'ble Incol11eTaxAppellateTribunal has erred in relying on the decision ofHon'blePunjaband HaryanaHigh Court in the case ofCIT vs. Punjab Financial Corporation, 254 ITR 6 (P&H)(Full Bench) when the two issues are entirely different?",.3.The facts, in brief, necessary for adjudicationas narratedin the appeal,are that the r~spondent-assessee,filed its return ofincomefor the assessmentyear 2005-06on 30.10,2005declaringincome of Rs. 3,68,440/-.,Later on, the income of the assessee was,',assessed vide order dated 26.10.2007,passed under Section 143(3)of the Act.The assessingofficer completedassessmentby takingthe status of the assessee as AOP (Association of Partners) and notas firm as the assessee had failed to furnish a certified amended,.. partnershipdeed along with the return and had, thus, not compliedwith the provisionsof Section184(4) of the Act.,The assessingofficer accordingly disallowed the deduction claimed by the assesseeon accountof salary and interest paid to the partners amouqtingtoRs. 8,08,671/-. ~.- theassesseebefor~theI~r 9f Income Tax (Appeals) [for short "the CIT(A)"],was5Y':toWedvide order dated16.11.2009.Duringthe courseofg before the CIT(A), it was submitted on behalf of the assessee- ~~--'~iqymeansof written submissionsthat the adoptionof the status asAOP against the status claimed as 'Firm' and disallowancemade bythe assessingofficer on the above count was unsustainablein law.The CIT(A)in theordernoticedthat the assesseehad filed, thecertifiedcopyofthepartnershipdeedduringtheassessmentproceedingsbeforetheassessing- officerandtheclaimof. theassessee to be assessed as Firm was accepted.The addition of theamoun~ of interest of Rs. 6,86,671/- and salary of Rs. 1,20,0001- paidto the partners was, thus, deleted. 5.The Revenue preferred appeal impugning the order of the,CIT(A). The Tribunal put its seal of affirmation on the findings of theCIT(A) and consequentlydismissed the appeal. 6.We have heard le'a'rned counsel for the appellant-rev~nueand have perused the record. . i .i7.The point for determinationin this case is,Iwhether non-Ifiling of a certified copy of the partnership deed along ~ith the returnIIiwould be fatal and it violates the provisions of Section! 184(4) of the-Act and consequently dis-entitles the assessee to claim'registration ofthe firm? 5.The Revenue preferred appeal impugning the order of the,CIT(A). The Tribunal put its seal of affirmation on the findings of theCIT(A) and consequentlydismissed the appeal. 6.We have heard le'a'rned counsel for the appellant-rev~nueand have perused the record. . i .i7.The point for determinationin this case is,Iwhether non-Ifiling of a certified copy of the partnership deed along ~ith the returnIIiwould be fatal and it violates the provisions of Section! 184(4) of the-Act and consequently dis-entitles the assessee to claim'registration ofthe firm? 8.-The Tribunal while allowing the plea of the assesseerelied on a Full Bench. judgment of this Court in CIT vs. p'unjab,Financial Corporation,254 ITR 6 (P&H) wherein non-filing 'of auditreport along with thereturn was held to be directory andnot :r:-C!):r:«z~tt:«J:CZ« 167 of 2011 /ribunal held that the assesseecould not be deniedistration where certified copy of the partnershipdeedfil~during the course of the assessmentproceedings'he finding recordedby the Tribunal in this'behalfin,para Nos.a90tthe order is as under: "8. The Hon'ble. Punjab and Haryana,High Courj: in CIT,vs. Punjab Financial Corporation (supra) has held that thefiling of audit report along with the return of incomecannot be treated as mandatory and the assesseecannot'be deprived of the benefits of deduction if the same isfiled before the finalization of the assessment. 9.In the facts of the present case" the assesseehadfurnished the certified copy of the partner$hip deed duringthe course of assessmentproceedings.The status ofbeing assessedas firm is being allowed to the assesseein the preceding year i.e. assessmentyear 2004-05 andthesameis alsoallowed to theassesseein theI,succeedingyearsi.e. assessmentyearsl 2006-07 and2007-08, vide order passed u/s 143(3) of\the Act. The,assesseefurther explained that the status! of firm in the,'succeeding year is claimed on the basis of the amendedinstrumentof partnershipfiled beforetheAssessing,Officer in the year under appeal.In the facts and thecircumstancesof the present case, we are of the' viewthat once the certified copy of amended partnership deedisavailablewith theAO beforecompletionof theassessmentproceeding, the benefit of being assessedinfurnished the certified copy of the partner$hip deed duringthe course of assessmentproceedings.The status ofbeing assessedas firm is being allowed to the assesseein the preceding year i.e. assessmentyear 2004-05 andthesameis alsoallowed to theassesseein theI,succeedingyearsi.e. assessmentyearsl 2006-07 and2007-08, vide order passed u/s 143(3) of\the Act. The,assesseefurther explained that the status! of firm in the,'succeeding year is claimed on the basis of the amendedinstrumentof partnershipfiled beforetheAssessing,Officer in the year under appeal.In the facts and thecircumstancesof the present case, we are of the' viewthat once the certified copy of amended partnership deedisavailablewith theAO beforecompletionof theassessmentproceeding, the benefit of being assessedin I I-oCt::J0U:I:-C):I:<Cz~~<C:I:Cz<CaJ<C,z:::::>c. ,5 statusof the firm is to be allowed.Respectfullyfollowing the ratio laid down by the coordinateBenchof,theTribunal,we. upholdtheorderof theCIT(A) in. directing the AssessingOfficer to assess-the assesseeinthe statusof firr)1. Consequently,the deductioncl~imedon account of interest and salary paid to the partners is tobe allowed.The grounds raised by the Revenue, arethus, dismissed. I I-oCt::J0U:I:-C):I:<Cz~~<C:I:Cz<CaJ<C,z:::::>c. ,5 statusof the firm is to be allowed.Respectfullyfollowing the ratio laid down by the coordinateBenchof,theTribunal,we. upholdtheorderof theCIT(A) in. directing the AssessingOfficer to assess-the assesseeinthe statusof firr)1. Consequently,the deductioncl~imedon account of interest and salary paid to the partners is tobe allowed.The grounds raised by the Revenue, arethus, dismissed. 9.No perversityor illegality couldbe pointedout by thslearned counsel for the appellant in the finding recorded by theCIT(A)reversing the order of the assessing officer,whereby the claimof the assesseefor assessmentas a firm and deduction on accountof salary and interest paid to the partners had been disallowed, and,,also inthe order of the Tribunal whereby the finding ofthe CIT(A)wasaffirmed.Nosubstantialquestionoflaw,thus,arisesforconsideration of this Court.learned counsel for the appellant in the finding recorded by theCIT(A)reversing the order of the assessing officer,whereby the claimof the assesseefor assessmentas a firm and deduction on accountof salary and interest paid to the partners had been disallowed, and,,also inthe order of the Tribunal whereby the finding ofthe CIT(A)wasaffirmed.Nosubstantialquestionoflaw,thus,arisesforconsideration of this Court. 10.In view of the above, the appeal is dismissed. July 7, 2011 *rkmalik*