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2017 (6) TMI 447 - AT - Income TaxAddition towards alleged difference in investment in partnership firm - Held that:- There is no evidence to the fact as to how much was generated from ASA & Co and from Dutta Trading Co. We find that the ld AO had made addition only on account of unexplained investment in Nature View Restaurant in the instant case. Hence we confine our opinion only on the point whether an addition could be made in the hands of the assessee towards undisclosed investment in Nature View Restaurant. In our considered opinion, the excess amount of ₹ 34,20,000/- , being the difference in capital account, as reflected in Nature View Restaurant vis a vis investment reflected in assessee firm’s books, is found credited only in the books of Nature View Restaurant. Hence if at all any addition that could be made, the same could be made in the hands of Nature View Restaurant u/s 68 of the Act. Alternatively, it could also be made in the hands of the respective partners who had deposed that the undisclosed income has been generated from two partnership businesses and the same has been ploughed back by them as investment in Nature View Restaurant. There is absolutely no case for making an addition in the case of the assessee firm in the instant case. Hence we have no hesitation in deleting the addition of ₹ 34,20,000/- made in the hands of the assessee. - Decided in favour of assessee. Disallowance of partners’ remuneration - addition u/s 40(b) - Held that:- It was held that the Circular No. 739 dated 25.3.1996 would be applicable where neither the amount has been quantified nor the limit of total remuneration has been specified in the deed, but the same has been left to be determined by the partners at the end of the accounting year. Only in such cases, the payment of remuneration cannot be allowed as deduction. It further held that when the manner of computation of remuneration is provided in the partnership deed and the same is in accordance with the provisions of section 40(b) then no disallowance of remuneration could be made. In the instant case, as stated supra, the partnership deed clearly mentions the manner of computation of remuneration. Hence respectfully following the ratio laid down in the said decision, we direct the ld AO to allow deduction towards partners remuneration in the sum of ₹ 1,57,735/-.
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