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2012 (9) TMI 578 - AT - Income TaxDisallowance of salary paid to working partner u/s 40(b)(i) – Working partner is an agent of two insurance companies despite being a partner – As per partnership deed, partner without consent of other partners cannot engage in other business either directly or indirectly – No chamber provided to partner in office of assessee – Held that:- Since partners was working as a working partner since inception and regularly attended the work of the assessee’s firm. Assessee submits copy of many bank cheques, having signature of partner as ‘Managing Partner’ and supporting bank statements. Assessee also provides NOC given by another partner for carrying on her own insurance agency business. On remand, the AO examined those documents and found correct. Decision in favour of assessee Addition of Service Tax being debit in P&L – Assessee receive insurance commission from insurance companies – Assessee passes accounting entry by gross commission & debit the Service Tax in P&L – Held that:- As per agreement insurance company will pay net amount after deduction of Service Tax. As per Rule 2 (d)(iii) of Service Tax Rules, this service comes under reverse charge mechanism. Therefore, insurance company liable to pay Service Tax. As far as assessee concern, credited the entire gross commission and debited the service tax in its books. The net result would be the same. Appeal decides in favour of assessee
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