TMI Blog2006 (2) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,696 after making an addition of Rs. 39,526, by way of partial disallowance of the assessee's claim relating to payment of remuneration to the partners. On appeal, the CIT(A)upheld the disallowance made by the Assessing Officer. Hence, assessee is in second appeal before me. 3. The learned counsel for the assessee submitted that: The order of the Appellate Commissioner is untenable to the extent of upholding the disallowance out of remuneration to the partners in terms of section 40(b)(v), when the assessee had in fact declared the income in accordance with section 44AF being a retail trader in Children toys games with gross turnover below Rs. 40 lakhs. The Appellate Commissioner has grossly misconstrued the provisions of section 44AF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when for determination of income for assessment recourse is made to the provisions of section 44AF by the assessee, being a small trader having a turnover of less than Rs. 40 lakhs, the books of account or the Profit Loss Account drawn up in accordance therewith are of no relevance, and that it is only the 5 per cent of the turnover declared in terms Of section 44AF which has to be taken into account as Book Profit for purposes of working out allowable deduction towards partners remuneration. In any event, the loss of Rs. 91,430 shown in the Profit Loss Account has been arrived at, only taking into account the remuneration to partners of Rs. 89,526, which was debited to the above account, and if that is excluded, the loss even as per P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder:- .. (2) in the case of any other firm- (a) on the first Rs. 75,000 of the book profit, or in case of a loss- Rs. 50,000 or at the rate of 90 per cent, of the book profit, whichever is more;.. 5.4 The dispute before us relates to interpretation of the term 'book 'profit' in clause (a) of section 40(b)(v)(2) above. According to the assessee, having, returned the income in terms of section 44AF, it is the 5 per cent of the turnover which is returned, which should be taken as 'book profit' for purposes of computing the allowable amount under section 40(b). On the other hand, as per the revenue, it is the profit as per the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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