Case Law Details
Ruskin Chemipharm Vs ACIT (ITAT Mumbai)
Introduction: The case of Ruskin Chemipharm vs. ACIT (ITAT Mumbai) revolves around an appeal filed by the assessee against the order passed under section 250 of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi (CIT(A)). The primary contention is the disallowance of interest paid to partners due to a mistake in the Tax Audit Report.
1. Background: Ruskin Chemipharm, a registered partnership firm, filed its income tax return for the assessment year 2018-19, declaring a total income of Rs. 1,34,90,214, sourced from profits and gains from business and profession. The initial return was processed under section 143(1) of the Income Tax Act, resulting in a computed total income of Rs. 1,98,96,544, with an addition of Rs. 64,06,330 under section 40(b) on account of disallowance of interest paid to the partners. The basis for this disallowance was the assertion that the interest paid exceeded the permissible limit.
2. Rectification Application: In response to this determination, the assessee filed a rectification application under section 154 of the Act. However, this application was also dismissed without providing relief to the assessee.
3. Appeal to CIT(A): Challenging the rectification order, the assessee appealed to the Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi. The appeal was dismissed based on the auditor’s remark in the Tax Audit Report, which deemed the interest paid to the partners as inadmissible.
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