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2011 (3) TMI 20 - HC - Income TaxRemuneration to partners - deduction u/s 40(b)(v)(1) - CBDT issued circular No.739, dated 25.3.1996 - for the assessment year 1996-97 and subsequent thereto, the circular provided that unless the partnership deed specified the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration, the benefit of Section 40(b)(v) would not be available to the assessee Firm – AO disallowed the salary of partner - It is settled law that the Central Board of Direct Taxes cannot issue a circular which goes against the provisions of the Act – Commissioner of Income-tax, Shimla vs. M/s Anil Hardware Store, Manali 2009 -TMI - 34559 The Section 40(b)(v) only lays down that either the working partner should be paid an amount specified in the partnership deed or it should not exceed the amount laid down in the Section. In the present case the partners have been paid their remuneration/salary strictly in accordance with the terms of the partnership deed and this amount paid to the partners does not exceed the maximum permissible amount and therefore, the assessee is entitled to the deduction. Accordingly it was held that appeal is allowed
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