GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (8) TMI 855 - DELHI HIGH COURT

2015 (8) TMI 855 - DELHI HIGH COURT - TMI - Disallowance u/s 40(b)(v) - whether remuneration paid to the partners of the Respondent Assessee firm was not in accordance with the provision of Section 40(b)(v) - ITAT deleted addition - Held that:- No reason to take a view different from the one taken by the ITAT. Clause 6(a) of the partnership deed dated 20th June 2008 clearly indicates the methodology and the manner of computing the remuneration of partners. The remuneration of the partners has be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with a view to adjusting the income of the partner to the extent of the amount not so deductible. A conspectus of these provisions makes the opinion the ITAT consistent with the legal position. - Decided against revenue.

A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y Vohra, one of the partners of the Assessee firm, was also a member of the executive body of the IFA. In the facts and circumstances, the contribution made by the Assessee to the IFA was held to be for inter alia creating greater awareness of the Assessee firm's activities and therefore an expenditure incurred for the purposes of the profession of the Assessee. It was accordingly held to be allowable as a deduction under Section 37(1) of the Act. Further, since the Indian branch of IFA was a no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Income Tax Act, 1961 ( Act ) by the Revenue is directed against an order dated 5th July 2013 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 1382/Del/2012 for the Assessment Year ( AY ) 2009-10. 2. The first issue sought to be projected by the Revenue in this appeal is whether the ITAT was correct in law in deleting the addition of ₹ 6,05,91,909 made by the Assessing Officer ( AO ) to the income of the Respondent Assessee firm on the ground that the remuneration paid to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ship deed was executed on 22nd June 2008 and made effective from 1st April 2006. 4. Clause 6(a) of the said deed read as under: Each Partner shall be entitled to an annual salary equivalent to his percentage share of profits multiplied by Allocable Profits . Allocable Profits shall be calculated as per the provisions of Section 40(b)(v)(1) of the Income-tax Act, 1961. The monthly salary of a Partner shall be equivalent to annual salary divided by 12. Such salary shall be deemed to accrue from da .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 26,50,000, ₹ 10,00,000 and ₹ 13,50,000 respectively. Such salary shall be deemed to accrue from day to day and may be drawn out in arrears and the salary so paid shall be treated as working expenses of the partnership before the profits thereof are ascertained. 6. It is seen in the assessment order dated 30th December 2011 for the AY 2009-10 that the AO took exception to Clause 6 of the partnership deed dated 22nd June 2008 as regards the formula for the computation of the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nership deed, Section 40(b)(v) of the Act would not apply. Consequently, the remuneration to the partners, not being in terms of Section 40(b)(v) of the Act, was disallowed. 7. The CIT (A) by the order dated 4th January 2013 upheld the order of the AO. In the impugned order dated 5th July 2013, the ITAT came to the conclusion that the term allocable profit should be understood by applying the common meaning which would be profits available for allocation . Explanation 3 to Section 40(b)(v) of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

emuneration, and when such an understanding is manifest in its actions, we do not see any reason why the Revenue authorities should not understand this term in the same sense. Consequently, the disallowance was held to be bad in law. 8. Having heard the submissions of Ms. Suruchi Aggarwal, learned Senior Standing counsel for the Revenue and Ms. Kavita Jha, learned counsel for the Respondent Assessee, the Court finds no reason to take a view different from the one taken by the ITAT in the facts a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted to the extent of the amount not so allowed to be deducted. Further Section 155 (1A) of the Act states that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

egards this issue, no substantial question of law arises. 10. The second issue concerns the deletion of the addition of ₹ 9,50,000 made by the AO on account of payment made by the Assessee to the Indian Branch of the International Fiscal Association ( IFA ), on the ground that it was not relatable to the business purposes of the Assessee. The Assessee had agreed to contribute ₹ 50 lakhs to the Indian branch of the IFA on progressive basis towards the cost of constructing one of its m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version