Details must be provided of Interest on loan and the salary paid to partner as prescribed in the Act is allowed whether he is absent at the time of survey

IN THE INCOME TAX APPELLATE TRIBUNAL

‘A’ BENCH, CHENNAI

BEFORE Dr. O.K.NARAYANAN, VICE-PRESIDENT

AND SHRI HARI OM MARATHA, JUDICIAL MEMBER

I.T.A. No.1592/Mds/2011

Assessment Year : 2006-07

M/s. V.Swaminatha Iyer & Co.,

No.55, T.S.R.Big Street,

Kumbakonam.

PAN: AAAFV5691E

(Appellant)

Vs.

The Deputy Commissioner of of

Income Tax, Circle-I,

Kumbakonam.

 (Respondent)

Appellant by : Mr. A.S.Sriraman, Advocate

Respondent by : Mr. Shaji P.Jacob, IRS.,

Commissioner of Income Tax

Date of Hearing : 8th December, 2011

Date of Pronouncement : 8th December, 2011

O R D E R

PER Dr.O.K.NARAYANAN, VICE-PRESIDENT:

This appeal is filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the order of the Commissioner of Income Tax(Appeals) at Tiruchirappalli dated 19.07.2011. This appeal arises out of the assessment completed under section 143(3) read with 147 of the Income Tax Act, 1961.

2. In completing the assessment, the assessing authority has made addition of ` 49,534/- as disallowance of interest attributable to loan creditors. The assessee’s books of accounts contained loan credits brought down from the earlier assessment year and still continuing. The assessee has provided interest thereon. It is that interest which is now disallowed by the assessing authority. The same has been confirmed by the Commissioner of Income Tax(Appeals). The assessee is aggrieved and therefore the second appeal before the Tribunal. The grounds raised by the assessee are as follows:-

“1. The order of the Commissioner of Income Tax(Appeals) is contrary to the facts and circumstances as also the legal position obtaining in the case of the appellant.

2. The Commissioner of Income Tax(Appeals) has disallowed the salary paid to lady partners since become they had not worked in the shop at that time of survey.

3. For these and other reasons that may be adduced at the time of hearing, it is prayed that the additions made as above be deleted.”

3. We heard Shri A.S.Sriraman, counsel appearing for the assessee and Shri Shaji P.Jacob, learned Commissioner of Income Tax appearing for the Revenue.

4. On going through the facts of the case and the grounds of appeal placed before us, we find that the assessee is aggrieved on two counts namely disallowance of interest to loan creditors and disallowance of salary paid to lady partners. The issue of interest to loan creditors is specifically reflected only in the statement of facts whereas the issue of salary paid to lady partners is reflected only in the grounds of appeal. We are also constrained to state that the amount of interest agitated by the assessee as interest to loan creditors at ` 49,534/- is not confirmed as the correct amount at the time of hearing. As a lot of such missing links are here, we remit back the file to assessing authority for de novo consideration after hearing the assessee. The issues agitated may be re-examined by the assessing authority specially taking into consideration the fact that loan credits are brought down from earlier assessment year on which the assessee has been claiming interest in a consistent manner.

5. In result, this appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court at the time of hearing on Friday, the 8th December, 2011 at Chennai.

            Sd/-                                                                                                      Sd/-

  (Hari Om Maratha)                                                                          (Dr. O.K.Narayanan)

   Judicial Member                                                                                   Vice-President

Chennai,

Dated the 8th December, 2011.

somu

Copy to:

(1) Appellant          (4) CIT(A)

(2) Respondent       (5) D.R.

(3) CIT                    (6) G.F.