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2005 (8) TMI 98 - RAJASTHAN HIGH COURTChallenged the Order passed by CIT u/s 263 - erroneous and prejudicial Order - Deduction on account of salary paid to the partners - Whether, in the absence of any reference to the partnership deed in the order of assessment and there being no entry in the record of production of the documents and in the absence of document being on record, the presumption of regularity of official act would extend to presumption about the production of document in question before the Assessing Officer? - HELD THAT:- On appeal the Tribunal was of the opinion that the stamps on which the 11 supplementary deed was executed were purchased on April 26, 1996. The genuineness of the purchase of stamps on that date was not in dispute and doubt. It was also not in dispute that it was executed by the signatories of the document. No presumption could have been drawn that it was a manufactured document with a back date. By producing the partnership deed containing the terms and conditions for payment of remuneration to partners and quantifying the amount to be paid to each partner in the deed itself, fulfils the condition u/s 40(b)(v) for allowing the deduction claimed. Primarily the burden which lay on assessee was discharged. No enquiry having been further conducted about the date on which the document was suspected to be executed and no opportunity having been allowed to the assessee before holding otherwise, the document could not have been assumed to be bogus. Hence, it found that the order of the Assessing Officer cannot be held to be erroneous and prejudicial to the interests of the Revenue. The order of the CIT for arriving at this conclusion that the document is ante-dated, no enquiry was concluded, no notice was given to the assessee before rejecting the genuineness of document and no opportunity was given to the partners of the firm to establish that the document was of the date on which stamps were purchased. Normally a document mentions the date of its execution. Ordinarily, the presumption is that it was executed on that date. The burden lies on the person who asserts that it is not executed on the date on which it purports to have been executed. The CIT could not have acted upon mere assumption. Mere suspicion cannot take the place of proof. The finding of the Tribunal about existence of the document during the previous year cannot be said to be perverse. Even assuming that the document dated April 26, 1996 was not in existence during the previous year relevant to the assessment year in question, the situation will be that the existing deed of partnership continued and remained in force without the supplementary agreement. The CIT himself has found that as per the partnership deed dated August 10, 1987, read with the supplementary document dated April 1, 1992, did contain a term relating to payment of salary to partners Nos. 1, 2, 4 and 5 from the firm as per rules. It was for the first time that a ceiling on allowability of salary paid to partners, was introduced with effect from April 1, 1992, vide the Finance Act, 1991, with the condition that allowability of deduction on account of salary from the income of the firm shall be subject to the terms of the deed of partnership providing for such payment. Reference to the rules referred to the limit of remuneration to be paid as per limit allowable as deduction u/s 40(b)(v). The Central Board of Direct Taxes in its circular dated March 25, 1996 21, has accepted the position that there was some confusion about the impact of the aforesaid provision and that most assessees have amended their deeds by incorporating the term like above and directed that on the basis of the said term the permissible deductions on account of salary paid to partners may be allowed from the income of the firm until the assessment year 1996-97. The benefit of ambiguity in the provision of the statute, if it existed prior to the assessment year 1996-97, did not cease to exist after 1996-97. The benefit of such ambiguity from construction of the statute ordinarily goes to the assessee. In that view of the matter the order of the CIT could not be sustained. Thus, we do not find any infirmity in the finding of fact reached by the Tribunal that the document could not have been assumed to be not genuine or ante-dated in the absence of any enquiry having been conducted in this regard, or without giving any opportunity to the assessee on this aspect of the matter. No interference is called for on the merits of the finding of the Tribunal that the assessee claimed deduction as per the terms of section 40(6) of the Act regarding remuneration paid to its partners under the supplementary deed dated April 16, 1998. The appeal, therefore, fails and it is hereby dismissed.
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