TMI Blog2005 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions for payment of remuneration to partners and quantifying the amount to be paid to each partner in the deed itself, fulfils the condition u/s 40(b)(v) for allowing the deduction claimed. Primarily the burden which lay on assessee was discharged. No enquiry having been further conducted about the date on which the document was suspected to be executed and no opportunity having been allowed to the assessee before holding otherwise, the document could not have been assumed to be bogus. Hence, it found that the order of the Assessing Officer cannot be held to be erroneous and prejudicial to the interests of the Revenue. The order of the CIT for arriving at this conclusion that the document is ante-dated, no enquiry was concluded, no notice was given to the assessee before rejecting the genuineness of document and no opportunity was given to the partners of the firm to establish that the document was of the date on which stamps were purchased. Normally a document mentions the date of its execution. Ordinarily, the presumption is that it was executed on that date. The burden lies on the person who asserts that it is not executed on the date on which it purports to have been execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms of section 40(6) of the Act regarding remuneration paid to its partners under the supplementary deed dated April 16, 1998. The appeal, therefore, fails and it is hereby dismissed. - HON'BLE RAJESH BALIA AND R.S. CHAUHAN, JJ. For the Appellant : K. K. Bissa For the Respondent : Anjay Kothari And S.C. Agarwal JUDGMENT Rajesh Balia J. 1. This appeal is directed against the order of the Income-tax Appellate Tribunal, Jodhpur Range, Jodhpur, dated August 29, 2003. The following substantial questions of law arise for consideration in this appeal under section 260A of the Income-tax Act, 1961: (I) Whether, on the facts and circumstances of the case, there was any material on the basis of which the Tribunal could assume that the partnership deed, on the basis of which claim to deduction on account of salary paid to the partners was made, was produced before the Assessing Officer? (II) Whether, on the facts and circumstances of the case, in the absence of any reference to the partnership deed in the order of assessment and there being no entry in the record of production of the documents and in the absence of document being on record, the presumption of regularity of official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such this case should have excluded from the purview of scrutiny, the contention of the authorised representative of the A appears to be in order. Since notice under section 143(2) stands issued therefore the asstt. is completed under section 143(2). Income-tax Officer. 4. It came to the notice while going through the audit by the audit party that assessee has claimed deduction of Rs. 1,27,650 from the profit of the firm was salary paid to the partners of the firm under section 40(b)(v), such deduction can be allowed if there is an agreement to that effect in the partnership deed. As per the report, there was no partnership deed on the record of assessment proceedings. It was apprehended that this deduction is contrary to section 40(b). 5. This lead to the issuance of notice under section 263 of the Income-tax Act by the Commissioner of Income-tax, Udaipur, who was prima facie of the opinion that the assessment of income vide order dated June 16, 1998, is erroneous and prejudicial to the interests of the Revenue. 6. In response to it, a written submission was submitted on March 1, 2001, in which it was stated: The assessee filed his income-tax return as per the provisions of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neration, the assessee was not entitled to claim deduction under section 40(b) of the Act. 10. In appeal against this order of the Commissioner of Income-tax relying on the document, affidavit was submitted by the assessee and drawing support from the presumption of regularity found in favour of the assessee that the document was produced before the Assessing Officer and that the Commissioner of Income-tax was not justified in assuming the document dated April 26, 1996, to be ante-dated without holding any enquiry into this fact by giving an opportunity to the assessee in this regard, when the stamp paper on which document was executed was of particular date then the date of execution, and that no presumption can be drawn about a document having been executed not on the date on which it purports to be. Presumption is otherwise. 11. So far as the answer to the first two questions is concerned, we are of the opinion that the Tribunal was in error in assuming and finding that the document in question was produced before the Assessing Officer. Apparently there was no denial that this document was not on the record of the Assessing Officer nor was it referred to in the proceedings. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x after considering the partnership deed which was produced before him, did not find that the terms of the deed dated April 26, 1996, did not fulfil the condition of allowability of deduction on account of remuneration paid to the partners of the firm. But he has based his finding on the basis that the deed was ante-dated, not in existence during the previous year. 16. On appeal the Tribunal was of the opinion that the stamps on which the 11 supplementary deed was executed were purchased on April 26, 1996. The genuineness of the purchase of stamps on that date was not in dispute and doubt. It was also not in dispute that it was executed by the signatories of the document. No presumption could have been drawn that it was a manufactured document with a back date. By producing the partnership deed containing the terms and conditions for payment of remuneration to partners and quantifying the amount to be paid to each partner in the deed itself, fulfils the condition under section 40(b)(v) for allowing the deduction claimed. Primarily the burden which lay on assessee was discharged. No enquiry having been further conducted about the date on which the document was suspected to be execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid provision and that most assessees have amended their deeds by incorporating the term like above and directed that on the basis of the said term the permissible deductions on account of salary paid to partners may be allowed from the income of the firm until the assessment year 1996-97. The benefit of ambiguity in the provision of the statute, if it existed prior to the assessment year 1996-97, did not cease to exist after 1996-97. The benefit of such ambiguity from construction of the statute ordinarily goes to the assessee. In that view of the matter the order of the Commissioner of Income-tax could not be sustained. 21. In view of the aforesaid discussion, we do not find any infirmity in the finding of fact reached by the Tribunal that the document could not have been assumed to be not genuine or ante-dated in the absence of any enquiry having been conducted in this regard, or without giving any opportunity to the assessee on this aspect of the matter. 22. No interference is called for on the merits of the finding of the Tribunal that the assessee claimed deduction as per the terms of section 40(6) of the Act regarding remuneration paid to its partners under the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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