TMI Blog2011 (1) TMI 1507X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 4,93,509/- against his income from salary of ₹ 47,107/- and interest of ₹ 5,39,153/- earned on the capital employed with two firms namely M/s. Hanuman Udyog and M/s. Yogendra International. There is exempt income of ₹ 2,98,926/- also as share of profit from these firms which is about 37.77% of the total taxable and non taxable income. Assessing Officer stated that the cost of capital employed as interest paid is required to be distributed between the taxable as well as non taxable income and, therefore, allocated 37.7% of the interest paid, i.e. ₹ 4,93,509/-, which amounted to ₹ 1,66,658/- for earning the exempt income of share of profit from the firm u/s. 14A of the I. T. Act and disallowed the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No.993/Mum/2007 for Assessment Year 2003-04 dated 14.11.2008. 4. On the other hand, the Ld. DR relied on the orders of the lower authorities and prayed before the bench to confirm the order of the Ld. CIT(A). 5. Heard both the parties, perused the material available on record and we find that the issue is covered by the decision of the Tribunal Mumbai Bench in the case of Hitesh D Gajaria Vs. ACIT, cited supra, wherein the Hon ble Tribunal has held as under : 4. We have considered the arguments of the parties and perused the material placed before us. We find that similar issue was considered by C Bench of the Mumbai Tribunal vide order dated 26th February. 2007 in the case of Shri Sudhir Kpadi vs ITO in ITANo.7888/M/03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 97-98 in its order dated 31/12/O4 in ITA No.3860/M/00. there also the Tribunal has held in favour of assessee that deduction is permissible under law. 5. When we examine the Issue in the light of the above judgment and decisions, we find that the claim made by the assesse is acceptable in law. The supreme court in the case of CIT. Madras Vs. R.M. Chidambaram Pillai has held that salary paid to a partner retains the same character as income of the firm This leads us to the next step; i.e. the abase of profits received by the partner from the firm retains the same character of the income of the firm : i.e. the share income retains the character of business income. The said business income is exempt from the levy of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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