TMI Blog2008 (8) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... lause No. 11 of partnership deed and adopted in the supplementary deed as well. From this clause it is evident that the various clauses of partnership which authorised the partners to charge interest on their capitals and remuneration to the working partners could be varied or amended either verbally or even by conduct. It was not necessary for the parties to have reduced such terms in writing in case they desired not to charge any interest or remuneration as such. From the conduct of parties it is evident that they have acted in terms of clause No. 11 of the partnership deed. AO, therefore, could not have compelled the assessee to charge such interest or remuneration by invoking s. 40 (b)(v) of the Act more particularly when it is not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Rs. 1,53,352 to the working partners even though the assessee did not claim the same in return of income filed by it. 2. Briefly, the facts are that the assessee is a partnership concern evidenced the deed- of partnership dt. 4th April, 1998. The terms of partnership were amended through a supplementary deed executed on 5th March, 2003. The assessee returned its income without claiming interest on the capital of the partners and also the remuneration to the working partners. The AO further found that the deed of partnership provided payment of interest on capital of partners @ 12 per cent and also that the remuneration was payable to the working partners but the assessee has not charged the same to the P L a/c nor credited the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 5, On the other hand, learned Departmental Representative supported the findings and conclusion reached by the authorities below. It was further contended that the assessee has not complied (with) the terms of partnership and as such by virtue of provision of s. 185 of the Act, it was to be treated as an unregistered firm. 6, I have heard the parties and carefully perused the material on record. It is correct that the terms of partnership provided payment of interest @ 12 per cent on capital of partners as well as remuneration to the working partners. The assessee, however, did not make payment thereof to the partners nor made any provision of liability in the books of account. The perusal of deed of partnership reveals th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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