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2021 (7) TMI 798 - AT - Income TaxDisallowance of remuneration paid to the partners of the assessee firm - assessee is a partnership firm and filed its return of income u/s 139 declaring rental income from letting out of Theater to ADLABS Film Ltd. - HELD THAT:- AO has not disputed the books of account of assessee and corresponding withdrawal/drawing made by these two partners hence, any discrepancy in the statement of the partners is not going to change the condition prescribed u/s 40(b) (v) for allowing the claim of payment of remuneration to partners. AO has not disputed the fact that the payment has claimed by assessee to the partners on account of remuneration is not exceeding the limit provided u/s 40(b)(v) of the Act. Once the remuneration paid to the partners is in accordance of the provisions of Section 40(b)(v) and the actual payment of the said amount being credited to the capital account of the partners and corresponding withdrawal of the partners is not in disputed then the mere mistake in the statement of the partners would not rendered the claim of the partners firm not disallowed. Once the claim of payment of remuneration to partners is within the celling prescribed under Section 40(b) of the I. T. Act, 1961 the Assessing Officer cannot question the reasonableness of the remuneration when the genuineness of the payment is not in disputed.This issue is decided in favour of the assessee against the revenue. Disallowance of office expenses @ 20% - AO noted that the assessee has produced only ledger account of the expenses but no voucher has been produced - CIT(A) has deleted the said adhoc disallowance as held that the same is not proper - HELD THAT:- There is no dispute that the expenditure has been incurred for the purposes of business. It is also clear that the assessee had filed all the details of the expenses under various heads. AO has not pointed out any specific defects in these details filed. The AO has failed to bring any material on record to demonstrate that these expenses have not been incurred and are not verifiable. No disallowance can be made on mere suspicion. This addition is deleted. Since the CIT(A) has deleted the disallowance made by Assessing Officer, therefore, ground does not arise from the impugned order of the CIT(A) and accordingly the same are dismissed. Disallowance of advertisement expenses - AO has disallowed the claim of advertisement expenses on the ground that the assessee is not running the theatre in question but the same was the let out to Reliance Media Works Ltd. - HELD THAT:- There is no dispute that the assessee has let out the theatre in question to Reliance Media Works Ltd and not running the said theatre itself. Once the theatre is let out to third part for running then the claim of advertisement expenditure cannot be regarded as expenditure incurred wholly and exclusively for the purpose of the business assessee. Even otherwise, the assessee has not produced any supporting vouchers to prove that the expenditure was incurred for the purpose of the business of the assessee. Identical addition was confirmed by the CIT(A) for and A.Y.2012-13 the assessee has not challenged the said decision for the A.Y.2012-13. Even otherwise, once the assessee has let out the theatre to Reliance Media Works Ltd then the claim of the assessee cannot be accepted being incurred wholly and exclusively for the purpose of business of the assessee
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