2008 (8) TMI 419

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..... arious grounds challenges the decision to allow deduction for interest amounting to Rs. 32,214 on the capital contributed by the partners and remuneration amounting 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 A .....

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..... f the Act while computing assessable income of the assessee. 3. Learned CIT(A) confirmed the action of the assessing authority since in terms of partnership deed the partners were entitled for interest and remuneration but the same were not claimed by the assessee just to take benefit of set off of brought forward losses holding the same to be the case of tax avoidance. 4. Shri P.M. Chopra, lear .....

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..... e done by 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 .....

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..... 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. The AO, therefore, could not have compelled the assessee to charge such interest or remuneration by invoking .....

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..... cation in the action of the learned CIT(A) in upholding the decision of learned assessing authority in enforcing deduction of interest on capital and remuneration to working partners of the firm while computing the assessable income for the year under consideration. I, therefore, by allowing the grounds in appeal, direct the assessing authority to modify the computation of income accordingly. 7. .....

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