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2015 (1) TMI 392 - HC - Income TaxDisallowance u/s 40(b) - salary paid to partners - AO did not accept the amount surrendered during the survey as income from business - addition of "excess stock" - Held that:- It appears from the Assessment Order that there is nothing to conclusively establish that the amount offered for taxation in the return of income and credited in the books of account is not the business income of the assessee. The A.O who recorded the statement of the assessee u/s. 131 did not question the source of income of assessee in respect of the disclosed income. Therefore, the stock, cash, etc. found during the course of survey indicate that the income disclosed is in respect of the business carried on by the assessee. No evidence has been brought on record by the A.O to establish that the assessee was doing any other activity other than the business in gold ornaments, etc. for which the amount was disclosed. It is, therefore, clear that the amount disclosed is nothing but, the business income of the assessee. - Now, when the business activity of the assessee has been accepted and no other source of income is found, then there was no justification for disallowing the salary paid to Partners at ₹ 4.50 Lacs. Therefore, the disallowance of ₹ 4.50 Lacs granted by the A.O and confirmed by the Tribunal is erroneous and deserves to be quashed and set aside. - Following decision of Md. Serajuddin & Bros. v. Commissioner of Income tax [2012 (8) TMI 104 - CALCUTTA HIGH COURT] - Decided in favour of assesse.
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