Bhaveshbhai Bhimjibhai Savani Vs ITO (Gujarat High Court)
Summary: The Gujarat High Court allowed two connected writ petitions challenging notices issued under Section 148 of the Income Tax Act, 1961 for reopening the petitioner-partner’s assessments for A.Ys. 2012-13 and 2013-14. Special Civil Application No.18955 of 2019 concerning A.Y. 2013-14 was treated as the lead matter because the reasons recorded in both cases were identical. The petitioner was a partner of M/s. My Home Developers, a firm engaged in developing housing projects. Although the partnership deeds dated 27.06.2007 and 01.04.2008 contained a discretionary clause concerning interest on partners’ capital, no remuneration was payable to partners. The partnership deed was subsequently amended with effect from 01.04.2009 and the partners mutually agreed that no interest on capital would be payable. Consequently, from F.Y. 2009-10 onwards neither interest on capital nor remuneration was payable to the partners. The partnership firm had claimed deduction of Rs.15,78,260/- under Section 80IB(10) for A.Y. 2012-13, which was allowed in the scrutiny assessment completed under Section 143(3). The firm’s assessments for A.Ys. 2011-12 to 2013-14 were later reopened, but the Gujarat High Court, by judgment dated 09.02.2021 in Myhome Developers Vs. The Assistant Commissioner of Income Tax and allied matters, quashed those reassessment proceedings.
