Intimation under sec 143(1)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 November 2013 I have Received Intimation under Sec 143(1) for the A.Y.2012-13 of partnership Firm.Return is Filed under sec 44ad and demand raised in Intimation.As per Intimation Interest Paid to Partner,Depreciation Disallow.and Income of Rent is Consider Separately as well as also included in Business Income.What Could be the Reason behind this??Return is not Filling With in due date.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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29 November 2013 Please furnish the relevant data, so that proper reply can be made.
.
Also provide Total Income as per the assessee and as per CPC.
.

Querist : Anonymous

Querist : Anonymous (Querist)

30 November 2013 Computation as under.
Gross Turnover 5463768
8%of Turnover 437101
Net Profit as per P & l 16219
Add: Depreciation 82792
Interest Paid to Partner 398133
Remuneration to Partner 150000
Less: Income Other(Rent) 32400
Depreciation as per I.T 82168
Income 532576
Income Considered is 532576
Less:Interest Allowed 398133
Remuneration 150000
So Loss is 15557 as per return
but as per cpc order 497157

so what can be reason??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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01 August 2024 In your case, the Intimation under Section 143(1) shows a demand due to discrepancies between the income and deductions reported in the return and the calculations made by the CPC (Centralized Processing Centre). Here’s a breakdown of the likely reasons and actions you should consider:

### **1. **Interest on Partner’s Capital**

- **Disallowance**: Interest paid to partners is generally allowed under Section 40(b), but if not correctly claimed or reported, it may be disallowed. Verify that the interest was properly claimed under the correct section.

### **2. **Depreciation Disallowance**

- **Mismatch**: The depreciation claimed in the return should match the depreciation computed as per Income Tax rules. Ensure that the depreciation calculation complies with the Income Tax Act. The depreciation allowed for tax purposes might differ from the book depreciation.

### **3. **Rent Income**

- **Separate Reporting**: Rent income should not be included in the business income if it is from a separate source. It should be reported separately as “Income from House Property” and not combined with business income. Ensure that rent income was reported under the correct head of income.

### **4. **Calculation Errors**

- **Turnover and Profit Computation**: The CPC might have used a different method or assumption to compute the income and deductions. Ensure that the turnover, net profit, and all other entries are correctly reported.

### **5. **Loss Computation**

- **Discrepancies**: If the CPC’s computation shows a different figure, verify the calculations and adjustments made in your return. Compare the figures used by the CPC and the ones reported in your return to identify discrepancies.

### **6. **Due Date and Compliance**

- **Filing Delay**: Since the return was not filed within the due date, there could be penalties or additional interest implications. Ensure that all compliance requirements are met.

### **Steps to Resolve the Issue**

1. **Review the Intimation**: Carefully review the intimation and compare it with your return. Check the specific reasons mentioned for the adjustments.

2. **Rectify the Return**: If there are discrepancies, file a rectification application under Section 154. This is used to correct mistakes or omissions in the original return.

3. **Check Computation**: Ensure that all calculations, including turnover, profit, and deductions, are accurate and comply with tax laws.

4. **Documentation**: Gather all relevant documents, such as bank statements, invoices, and contracts related to interest payments and rent income. These will help in verifying and substantiating your claims.

5. **Seek Professional Advice**: Consider consulting a tax professional or CA to help review the discrepancies and provide guidance on filing a rectification application if necessary.

### **Sample Rectification Request Format**

```plaintext
[Your Name]
[Your Address]
[City, State, PIN Code]
[Date]

The Assessing Officer,
Income Tax Department,
[Office Address],
[City, State, PIN Code]

Subject: Rectification Application Under Section 154 for A.Y. 2012-13

Dear Sir/Madam,

I have received an intimation under Section 143(1) for the Assessment Year 2012-13, which reflects a demand of Rs. [Amount]. Upon reviewing the intimation, I have identified discrepancies between the computations made by CPC and the figures reported in my return.

Specifically:
- Interest paid to partners was not correctly considered.
- Depreciation disallowance needs rectification.
- Rent income was incorrectly included in the business income.

I request you to kindly review the rectification application and make the necessary adjustments. Enclosed are copies of the relevant documents and corrected computations for your reference.

Thank you for your attention to this matter.

Yours sincerely,
[Your Signature]
[Your Name]
```

Ensure to submit the rectification application through the Income Tax e-filing portal or manually, as applicable. Maintain copies of all documents and correspondence for future reference.