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2019 (2) TMI 333 - ITAT COCHINDisallowance of remuneration paid to working partners - authorization of remuneration paid to working partners as per the Partnership deed - Scope of Section 40(b)(v) - instead of specified remuneration, it is linked to provisions of income tax Act, 1961 - Held that:- A reading of section 40(b)(v) clearly shows that the amount of remuneration which does not exceed the amount given in the Income-tax Act is deductible. In the present case, the partnership deed provides that the remuneration will be as per the provisions of the Income-tax Act. It clearly means that the remuneration payable to the partners shall be quantified as per the provisions of the Income-tax Act and shall not exceed the maximum remuneration provided. It is not in dispute that the partners were paid remuneration which was less than the maximum provided by the Income-tax Act. There is no doubt with regard to the payment of remuneration and in fact account books of the assessee firm have been accepted as correct. There is no doubt that the partners are working partners and remuneration has been paid to such working partners. Therefore, the Circular has to read along with section 40(b)(v) and has to be made subject to provisions of section 40(b)(v) of the I.T.Act. Section 40(b)(v) 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 relevant provisions of the Income-tax Act. Remuneration paid to the working partners has to be allowed as deduction in the hands of the assessee-firm. - Decided in favour of assessee
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