Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2017 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 521 - HC - Income TaxDetermination of remuneration to partners u/s 40(b) - Income earned in the FDR (surplus funds) - whether to be considered as part of the income of the business - Section 40(b)(v) applicability - whether ITAT is justified in considering the interest as part of the book profit in contravention of Section 40(b) i.e as per Section 40(b) the book profit has to be computed in the manner laid down in Chapter-IV D? - Held that:- The FDR which was invested by the assessee was never the part of business, in that view of the matter, the income which has been earned in the FDR cannot be considered as part of the income of the business. In that view of the matter the contention raised by learned counsel for appellant that Section 40(b)(v) of Explanation, the Tribunal and the CIT have seriously committed error and the view taken by the AO required to be allowed is not sustainable. It was never intention of the legislation to differentiate Section 40(b) falling under Chapter IV-D which income is to be considered as business income taking into consideration the purpose of Section 115J and granting benefit for initiation of the entries, it is investment of surplus funds of the respondents which is not part of the business income. Therefore, the same proviso will not apply in the facts of the case. - Decided against assessee.
|