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2023 (4) TMI 136 - AT - Income TaxAddition u/s. 40(b)(v) - remuneration paid to partners - amendment to partnership with retrospective effect - assessee challenged the grounds of violation of principle of natural justice - HELD THAT:- The claim of the assessee is also supported by the case laws relied upon by the assessee in the case of Durgadas Devkinandan [2011 (3) TMI 20 - HIMACHAL PRADESH HIGH COURT] wherein it was held that the remuneration to partners should be calculated as per the partnership deed subject to the provisions of the Act where the said remuneration should not exceed the maximum amount provided under the Act. We would also like to place our reliance on the decision of CIT vs. Great City Manufacturing Co [2012 (12) TMI 875 - ALLAHABAD HIGH COURT] wherein it was held that the A.O. has to see if the conditions of the partnership deed provided for remuneration to working partners and that the same is within the limit prescribed u/s. 40(b)(v). The supplementary partnership deed operates retrospectively, the calculation of the remuneration paid to partners if in accordance with the provisions of the Act is to be allowed. We would also like to draw our support to the contention of the assessee that in the earlier years that the said claim was not disputed by the lower authorities for which we would like to place our reliance on the decision of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] for the proposition that when there are no change in facts and when the claim has been allowed in the earlier years without being in dispute, the same may be considered for the impugned year also. As it is observed that the assessee has been claiming the modified remuneration since the amendment of the provisions for which there was no dispute, we are of the considered opinion that the assessee’s claim for the impugned year should also be granted. From the above observation we hereby delete the impugned addition and allow the assessee’s claim of remuneration to partners as per the amended provision of the Act. Hence, ground no.1 of the assessee is allowed. Violation of principle of natural justice - As no adjudication, as the assessee has been given a relief as prayed for in the previous ground.
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