ASSISTANT COMMISSIONER OF INCOME TAX Vs. TAKSHILA HANDLOOM INDUSTRIES
INCOME TAX APPELLATE TRIBUNAL
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M.A. Bakhshi, Judicial Member -
(1.) THE appeal of the revenue is directed against the order dated 22nd January, 1990 of the Deputy Commissioner of Income-tax (Appeals), Rohtak. THE dispute is relating to allocation of share amongst the partners of the firm.
(2.) The assessee had made a claim under Section 32AB which was allowed by the Assessing Officer in computing income of the firm. This deduction, however, was added back for the purpose of apportionment of shares amongst the partners. Aggrieved by the action of the Assessing Officer, the assessee appealed to the first appellate authority. The Deputy Commissioner (Appeals) relying upon a decision of the Commissioner of Income-tax (Appeals), Karnal, in the case of M/s. Life International, Karnal allowed the appeal of the assessee and directed the Assessing Officer not to include the deduction allowed to the firm under Section 32AB while making the share allocation. The revenue is aggrieved.
It was contended before us that under Section 32AB deduction is permissible to the firm only and that no deduction is permissible to the partners.
(3.) WE have given our careful consideration to the rival submissions. Section 32AB has been incorporated by the Finance Act of 1986 with effect from 1-4-1986 providing for deduction out of income from profits and gains of business or profession subject to fulfilment of certain conditions. Since the assessee has fulfilled the conditions as provided under Section 32AB deduction was allowed to the firm. A proviso has been inserted by the Finance Act of 1987 with effect from 1 -4-1987, which reads as under:-
Provided that where such assessee is a firm or any association of persons or any body of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or as the case may be, any member of such firm, association of persons or body of individuals.;
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