M/S. NITIN B. KARVE, MUMBAI v. THE ACIT CIR 11(3), MUMBAI

ITA 3089/MUM/2008 | 2003-2004
Pronouncement Date: 19-01-2010 | Result: Allowed

Appeal Details

RSA Number 308919914 RSA 2008
Assessee PAN AAEAK1859M
Bench Mumbai
Appeal Number ITA 3089/MUM/2008
Duration Of Justice 1 year(s) 8 month(s) 13 day(s)
Appellant M/S. NITIN B. KARVE, MUMBAI
Respondent THE ACIT CIR 11(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 19-01-2010
Date Of Final Hearing 04-01-2010
Next Hearing Date 04-01-2010
Assessment Year 2003-2004
Appeal Filed On 06-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI. BEFORE SHRI SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMB ER AND SHRI V.D. RAO JUDICIAL MEMBER. I.T.A. NO. 30 89/MUM/2008 ASSESSMENT YEAR : 2003-04. NITIN B. KARVE ASSTT. COMMISSIONER OF C/O BSR & CO. KPMG HOUSE VS. INC OME TAX- CIR. 11(3) KAMLA MILLS COMPOUND MUMBAI. 448 SENAPATI BAPAT MARG LOWER PAREL MUMBAI-400013. PAN AAEAK1859M. APPELLANT RESPONDENT APPELLANT B Y : SHRI ARVIND SONDE. RESPONDENT BY : SMT. APARNA AG ARWAL. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) DATED 27-3-2008. 2. FACTS IN BRIEF. THE ASSESSEE IS A CHARTERED ACCOUNTANT AND IS A P ARTNER OF M/S BHARAT S. RAUT & CO. (NOW KNOWN AS BSR & CO.). HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 29 TH MARCH 2004 DECLARING A TOTAL INCOME OF RS.30 86 420/-. DURING THE PREVIOUS YEAR THE ASSESSEE HAD RECEIVED REMUNERATION FROM THE PARTNER SHIP AND OFFERED THE SAME TO TAX UNDER THE HEAD INCOME FROM BUSINESS AN D PROFESSION. HE CLAIMED CERTAIN EXPENSES AGAINST THIS PROFESSIONAL INCOME. THE EXPENSES 2 CONSTITUTED 5.02% OF THE GROSS PROFESSIONAL INCOME AND WERE IN THE NATURE OF BOOKS AND PERIODICALS PURCHASED CAR EXPENSES D RIVERS SALARY ETC. THE AO HELD THAT THIS EXPENDITURE WAS PERSONAL IN NATUR E AND DISALLOWED THE SAME. ON APPEAL THE FIST APPELLATE AUTHORITY UPHEL D THE ORDER OF THE AO. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE MR. ARVIND SONDE SUBMITTED THAT SIMILAR ISSUE HAS C OME UP BEFORE DIFFERENT BENCHES OF THE TRIBUNAL AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE.HE FILED COPIES OF THOSE ORDERS AND RE QUESTED THAT THE PRINCIPLES LAID DOWN THEREIN BE APPLIED TO THE FACT S OF THIS CASE AND RELIEF GRANTED. 4. THE LEARNED DR MRS. APARNA AGARWAL THOUGH NOT LEAVING THE GROUND ULTIMATELY AGREED THAT THE TRIBUNAL HAD ON EARLIER OCCASIONS ON SIMILAR FACTS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE. 5. AFTER HEARING RIVAL SUBMISSIONS WE FIND THAT T HIS BENCH OF THE TRIBUNAL IN THE CASE OF SUDHIR D. PATIL VS. DCI T REPORTED IN 2 SOT 678 J-BENCH MUMBAI HAD CONSIDERED THE QUESTION O F ALLOWING EXPENDITURE WHILE COMPUTING INCOME FROM A PARTNER AGAINST SALARY RECEIVED BY THE PARTNER FROM THE FIRM. THE TRIBUNAL HAD TAKEN THE VIEW THAT THE SALARY FROM THE FIRM IN WHICH THE ASSESSEE IS A PARTNER IS IN THE NATURE OF BUSINESS INCOME U/S 28(V) AND THEREFORE INTEREST PAID BY THE PARTNER ON MONEY BORROWED FOR CONTRIBUTING CAPITAL HAS TO BE ALLOWED AS A DEDUCTION IN THE HANDS OF THE ASSESSEE. IN RESPECT OF THE NATURE OF THE SHARE IN THE PROFITS OF THE FIRM IN THE HANDS OF T HE PARTNER THE SUPREME COURT HAS CONSIDERED THE ISSUE IN THE CASE OF CIT MADRAS VS.R.M. CHIDAMBARAM PILLAI 106 ITR 292 AND HELD THAT SALARY PAID TO A PARTNER IS BUSINESS INCOME. APPLYING THOSE CASE LAWS TO A PART NER OF A CHARTERED 3 ACCOUNTANT FIRM THE C-BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SUDHIR KAPADIA VS. ITO ORDER DATED 26 TH FEB. 2007 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. SIMILAR VIEW WAS TAKEN BY THE J-B ENCH OF THE TRIBUNAL IN THE CASE OF MR. ANAND J. VASHI VS. ITO IN ITA NO. 3269/MUM/2006 ORDER DATED 23 RD JANUARY 2009. RESPECTFULLY APPLYING THE RATIOS LA ID DOWN IN THESE DECISIONS TO THE FACTS OF THIS CASE WE DI RECT THE AO TO ALLOW THE CLAIM OF EXPENSES MADE BY THE ASSESSEE AGAINST HIS PROFESSIONAL INCOME. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF JANUARY 2010. SD/- SD/- (V.D. RAO) (J. SUDHAKARY REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 19 TH JANUARY 2010. WAKODE COPY FORWARDED TO : 1. APPLICANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR I-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES