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2012 (8) TMI 104 - HC - Income TaxExcessive claim of deduction of partners’ remuneration - notice issued u/s 154 - Held that:- It appears from the orders of the AO when notice u/s 154 was issued replies in writing were given explaining how the computation of remuneration of partners were determined and the same were shown in the audited accounts, the said explanation was not accepted and AO was of the view that the entire profit of the business of the assessee cannot be a book profit for the purpose of explanation 3 of Section 40(b)(v) - that income from other sources could be taken into consideration for ascertaining book profit for the purpose of computation of allowable remuneration to partners not the income from business alone, thus undoubtedly this is a debatable issue and such debatable issue cannot be a ground for rectification u/s 154 - the point which was not examined on fact or in law cannot be dealt with as a mistake apparent on the record this dispute raised a mixed question of fact and law. Thus for the purpose of Section 40(b)(v) read with Explanation there cannot be separate method of accounting for ascertaining net profit and/or book-profit as it nowhere provides that the net profit as shown in the profit and loss account not the profit computed under the head profit and gains of business or profession - Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh inquiry in regard to the entries made in the books of account of the company Even if the income from other sources is included in the profit and loss accounts to ascertain the net profit qua book-profit for computation of the remuneration of the partners the same cannot be discarded.
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