COMMISSIONER OF INCOME TAX Vs. C S KOTHARI

JUDGEMENT

(1.) THIS Appeal is by the Revenue under Section 260a of the Income Tax act, 1961 (hereinafter referred to as the 'act' ). The above appeal came up for hearing before this Court on 20. 10. 2003 and this Court admitted the appeal and formulated the following substantial questions of law:

(2.) THE facts relating to the above questions of law are as under:-The assessment year involved is 1991-92 and the corresponding accounting year ended on 31. 03. 1991. The assessee is an individual and his main income is the share of income from M/s. Basic Engineers and Traders, chennai. For the said assessment year, the assessee furnished his return of income on 30. 10. 91 declaring an income of Rs. 64,11,050/ -. The assessment was completed under Section 143 (1) (a) of the Act vide intimation dated 09. 01. 1992, wherein the total income was determined at Rs. 65,18,034/- instead of rs. 64,11,050/ -. In the Adjustment Explanatory Sheet annexed to the intimation referred supra, the share income of the assessee was taken at Rs. 65,49,099/-as against the declared share income of Rs. 65,18,034/ -. Aggrieved by the variation in income, the assessee, vide letter dated 01. 09. 1992 requested rectification of the assessment under Section 154 (1) (b) of the Act. The assessing Officer, by letter dated 21. 09. 1992 pointed out that the variation in income was due to the correct share of income from the firm of M/s. Basic engineers, Madras being adopted and there was no mistake apparent from the records which required rectification. While arriving at the correct share of income, the Assessing Officer had excluded a sum of Rs. 2,13,972/- being interest payable under Sections 234a, 234b and 234c of the Act from the total tax payable by the firm for determining apportionable profit among the partners.

(3.) AGGRIEVED by that order, the assessee filed an appeal to the commissioner of Income Tax (Appeals ). The Commissioner of Income Tax (Appeals) dismissed the appeal and confirmed the order of the Assessing officer. Aggrieved by the same, the assessee filed an appeal before the income Tax Appellate Tribunal. The Income Tax Appellate Tribunal allowed the appeal filed by the assessee and set aside the order of the Assessing Officer issued under Section 143 (1) (a) to the extent of not adding interest under sections 234a, 234b and 234c to the tax portion of the firm for determining apportionable profit among the partners.