TMI Blog2006 (4) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... together for the sake of convenience. 2 At the threshold, in both the appeals, the assessee had raised the plea that the reopening is bad in law and illegal in this case. However, before us learned counsel for the assessee submitted that he is not pressing the ground. Hence, this ground is dismissed as not pressed. 3 The next common ground raised is that the learned Commissioner of Income-tax (Appeals) erred in holding that the provisions of section 44AF applies to the facts of the case. The Commissioner of Income-tax (Appeals) fundamentally failed to appreciate that the provisions of section 44AF is a special provision and applies only in the case of the retail business and factually the assessee had been carrying wholesale busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 28 to 43C, in the case of an assessee engaged in retail trade in any goods or merchandise, a sum equal to five per cent. of the total turnover in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head 'Profits and gains of business or profession' Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted by the lower authorities that the assessee-firm is a wholesale dealer. Evidently, when the assessee is a wholesale dealer, the provisions of section 44AF will obviously not be applicable in the case of the assessee. The assessment should be done as per the sanguine provisions of law as applicable to the facts of the case. It is neither open for the assessee nor for the Revenue to opt for a particular section of their choice for taxation of a particular item irrespective of its applicability to the facts of the case. Since this aspect has not been examined by the lower authorities, we, in the interest of justice, remit this issue to the files of the Assessing Officer to give a finding in this regard. The assessee should be given adequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the terms of partnership deed is allowable. Admittedly, only Rs. 48,000 was paid during this year to partners, which was also credited in the accounts of the partners. Thus, there is no payment of remuneration in excess of Rs. 48,000 even on accrual basis. As per clause 9 of the partnership deed, which is extracted in paragraph 4 of this order, the salary to working partners is to be decided by mutual understanding in case there was no sufficient profit. In this case, the book profit before allowing salary to partners was only Rs. 64,823 (Rs. 16,820 + Rs. 48,000). Thus, there was no profit for payment of salary to the extent of Rs. 5,000 per month to each working partner. Thus, the partners have mutually agreed to pay salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 of the book- at the rate of 60 per cent.; profit (c) on the balance of the book-profit at the rate of 40 percent. Provided that in relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on April 1, 1993, the terms of the partnership deed may, at any time during the said previous year, provide for such payment." 11 From the above, it is evident that the sanguine provisions of the Act mandate the allowance of amount actually paid/provided iii the accounts as per the terms of partnership deed. The assessee may have a case that clause 9 of the partnership deed permitted the payment of the amount as contended by the assessee, but when the assessee is neither payin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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