TMI Blog2013 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon the above decision it was decided to grant the deduction in respect of salary worked out as per the provisions of Section 40(b) of the Act and in accordance with the partnership deed from the undisclosed income disclosed during the course of survey considering the same as business income – Decided against the Revenue. - ITA No.440/Ahd/2012 - - - Dated:- 11-5-2012 - Shri D. K. Tyagi, JM And A. Mohan Alankamony, AM,JJ. For the Appellant : Shri B. L. Yadav, Sr. DR For the Respondent : Shri Rasesh Shah, AR ORDER Per A. Mohan Alankamony:- This appeal is filed by the revenue aggrieved by the order of the learned CIT(A)-IV, Surat dated 20-10-2011 in appeal No. CAS-IV/239/10-11, for assessment year 2008-09, challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed business income of the assessee. It was further stated that partners of the assessee firm had mentioned the same in the statement before the revenue and the same was accepted and no further incriminating documents was found to show that the income offered was not business income. After considering the reply of the assessee, the learned AO allowed remuneration to the partners of Rs.28,26,818/- as against the allowable claim of remuneration of Rs. 52,25,611/- u/s. 40(b) of the Act and the partnership deed. The learned AO placed reliance on the following decisions in arriving at his conclusion for disallowing Rs. 23,98,795/-: (i) M/s. Whileline Chemicals Vs ITO ITA No.3509/Ahd/2004 dated 30-08-2005, ITAT Ahmedabad Benches (ii) Fakir M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce from partners remuneration was therefore warranted. In any case, the whole exercise of disallowing partners remuneration is tax neutral as only the amount allowed as deduction is required to be taxed in the hands of the partners. Further, the reliance of the A. O. on the decision in the case of M/s. Whiteline Chemicals is misplaced as the decision in that case was rendered after upholding the rejection of books for discrepancies found and for the purpose of estimation of income after such rejection. The addition made on account of disallowance from partner s remuneration is therefore deleted. 4. The learned DR forcefully submitted that the salary of the partners was deliberately debited to the profit and loss of the appellant in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed during the course of the survey to be treated separately as deemed income and the allowable salary to be worked out on the balance profit in accordance with the partnership deed and provisions of 40(b) of the Act. At the outset, we must say that this issue is squarely covered by the decisions rendered by ITAT Ahmedabad Benches in the following two cases- (i) ITA No.556/Ahd/2008 dated 05-06-2009 M/s.Arihant Enterprise Vs DCIT, Cir-3, Surat wherein it was held by the ITAT Ahmedabad D Bench as under: 7.3 The ld. CIT(A) in the impugned order has also drawn support from a decision of the ITAT in the case of Whiteline Chemicals (supra) holding that income which is disclosed in course of the survey would have to be shown in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction on account of remuneration to a working partner alone is admissible in terms of the stipulations in partnership deed subject to the limits prescribed in the aforesaid provisions, we have no alternative but to restore the issue of deduction of remuneration to Smt. Jignaben M Shah to the file of the AO with the directions to allow sufficient opportunity to the assessee to establish that Smt. Jignaben M Shah is a working partner within the meaning of explanation 4 to sec. 40(b) of the Act and thereafter dispose of the matter in accordance with law. 7.5 In view of the foregoing and subject to our directions in Para 7.4 above, we set aside the impugned orders of Revenue authorities and direct the Assessing Officer to allow deduction of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
