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2019 (2) TMI 345 - AT - Income TaxAddition u/s 40(b) - Addition being partner’s remuneration - Held that:- Reading of section 40(b)(v) clearly shows that amount of remuneration which does not exceed the amount specified in the Act is deductible. The Board has provided that either the amount of remuneration payable to each individual should be fixed in the agreement or the partnership agreement deed should lay down the manner of qualifying such remuneration. The circular has to be read along with section 40(b)(v) and has to be made subject to section 40(b)(v). This section does not lay down any condition of fixing the remuneration or the method of remuneration in the partnership deed. All that the section provides is that in case the payment of remuneration made to any working partner is in accordance with the terms of the partnership deed and does not exceed the aggregate amount as laid down in the subsequent portion of the section the deduction is permissible. The remuneration had to be worked out based on certain percentage of the book profit. We are of the considered that that the provisions of section 40(b)(v) as well as clause of the partnership deed are to be interpreted harmoniously. While relying upon the judgments cited above, we are of the view that Clause-6 of partnership deed of the assessee specifically contains that the salary /remuneration is to be computed as provided in section 40(b)(v) or any statutory enactment thereto. It has also been quantified that the profit and loss in the business of the firm shall be arrived at after accounting for the said remuneration and interest so double to the partners as the business expenditure of the firm. Allow the claim of remuneration paid to the partners. With these observations, we allow this ground of appeal raised by the assessee.
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