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TMI Blog2012 (5) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- made by the A.O. on account of disallowance of remuneration to working partner." 3. The facts of the case are that the assessee filed return of income on 30.3.2004 declaring total income of Rs. 57,68,056/-. The case was taken up for scrutiny and the assessment was completed u/s 143(3) vide order dated 7.7.2004 and after making certain additions the total income was determined at Rs. 74,96,800/-. Against the additions, the assessee preferred appeal before CIT (A). CIT (A) granted partial relief to the Assessee. 4. Subsequently the case was reopened for the reason that it was noticed by the AO that despite having negative book profits of Rs. 17,69,534/-, remuneration of Rs. 10,00,000/- was allowed to partners. According to AO, as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted and it has been explained business as the source of additional income then there is no bar in the Act from claiming partner's remuneration from such addition business income offered for taxation. 5. Aggrieved by the order of CIT (A) the Revenue is now in appeal before us. Before us the Ld. D.R. stated that the assessee firm made disclosure under the following head:- Investments in FDR 48,00,000 On money paid for Agam Row House 22,00,000 Machinery 23,79,225 Stock 4,01,580 Unrecorded cash 4,25,000 6. The Assessee had offered the same as business income but source of the same was not known and also income was not declared under any head of regular profit and loss account. As per the provisions of section 40(b), a partner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of dyeing and printing. A survey took place at the business premises of the Assessee and the assessee made disclosure u/s 133A. The disclosure of the income was made under the head of business income as the documents seized were related to the business of the Assessee. As all the amount of undisclosed income was fully related to the business of the assessee, the income was declared from business and not from other sources and accordingly the same was considered for the purpose of book profit for the purpose of calculation of remuneration payable u/s 40(b). These facts are not disputed by the Revenue. According to the AO the profit has arisen out of the disclosure made by the assessee u/s 133A. If the income disclosed u/s 133A is ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee declared that excess stock discovered during survey was out of current year's undisclosed income and took the same to its P&L a/c and claimed partner's remuneration against the same u/s 40(b). The same was held to be allowable. In the case of ACIT Vs Amin Yasin Saiyed (supra) the issue involved was whether disclosure made by the assessee during the course of survey prior to filing of return of income can be considered as income for the purpose of considering the limit for allowing remuneration to partners as provided u/s 40(a)(v) of the Act. The argument of the Revenue that the disclosed income cannot be considered as "book profit" in computing remuneration was not found to be acceptable and the Revenue's appeal was dismissed. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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