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2016 (3) TMI 531 - AT - Income TaxAddition to income of the assessee of the firm Messrs Madhu and Others duly assessed as PF AOP - Held that:- In view of decision of Honourable Supreme court in Rangila Ram And Others [2000 (8) TMI 11 - SUPREME Court] we confirm the action of AO in taxing the income of "M/s Madhu & Other" partnership firm as income of the assessee Mrs. Madhu – Individual. Additions made in the hands of ‘M/s Madhu & Ors’ which is a partnership firm - addition made on protective basis - Held that:- On the basis of additions made in the M/s Madhu & Others on protective basis Ld. AO has made the addition of ₹ 27,92,190/- on substantive basis in the hands of the assessee. As the income of M/s Madhu & Others has been assessed in the hands of assessee wherein disallowance u/s 40A(3) of ₹ 16,99,558/- and addition u/s 68 of ₹ 8,50,000/- has been made, it is apparent that no opportunity is given by assessing officer to the assessee. Reason for the same is that both the orders u/s 143(3) read with section 148 in the hands of the assessee as well as M/s Madhu & Others are passed on 20th March, 2006 and therefore we set aside ground no. 2 and 3 of the appeal of the assessee contesting the addition u/s 68 as well as u/s 40A(3) of the Act back to the file that assessing officer with direction to deal with both the issues on merit after giving proper opportunity of hearing to the assessee. Disallowance of the salary to the partners in the hands of M/s Madhu & Others - Held that:- We dismiss this ground as M/s Madhu & Others is not treated by assessing officer as a "Firm" but "AOP" and therefore deduction of salary to partner cannot be granted as deduction to AOP. As the income of AOP is taxed in the hands of assessee on substantive basis the income of AOP would be computed without granting deduction of salary to the AOP.
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