TMI Blog2019 (2) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-in the profitsharing ratio to both the partners. In our view, the clause of the partnership deed satisfies the requirement of the CBDT circular (supra) and there is no violation on the part of the assessee in this regard. As decided in the case of Vaish Associates [2015 (8) TMI 855 - DELHI HIGH COURT] the partners were entitled to annual salary equivalent with percentage of profit multiplied by the allocable profit calculated as per the provisions of section 40(b)(v) of the Act. In the instant case also remuneration has been shared in the profit-sharing ratio. The issue in dispute also deserve to be allowed on the principle of consistency as identical disallowance has been deleted by the Ld. CIT(A) immediately preceding assessment year i.e. 2009-10 and no appeal has been preferred by the Department on the said issue before the Tribunal. - Decided in favour of assessee. - ITA No.5349/Del/2015 - - - Dated:- 12-2-2019 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Shri Saksham Singhal And Shri Sumit Mangal, Advocate For the Department : Shri S.S. Rana, CIT(DR) ORDER PER O.P. KANT, A.M. This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(b)(v) of the Act will be admissible unless the partnership deed either specifies the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration. In view of the Assessing Officer, the partnership deed neither did quantify the amount of remuneration to partners nor specified the manner of quantifying such remuneration. Thus, the remuneration paid not being in accordance with the provisions of section 40(b)(v), not allowable . The Ld. Assessing Officer also relied on the decision of the Hon ble Delhi High Court in the case of Sood Brij Associate Vs. CIT (2010)15 taxmnn.com 76 (Delhi). The Ld. CIT(A) upheld the finding of the Ld. Assessing Officer. Aggrieved with the finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 5. Before us, the Ld. Counsel of the assessee filed a paper book containing pages 1 to 93 and submitted that the assessee has paid remuneration to the partners in accordance with the provisions of section 40(b)(v) of the Act. The Ld. Counsel drawn our attention to the relevant clauses of the partnership deed and submitted that manner of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed by,and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder :- [(a)on the first ₹ 3,00,000 of the book-profit or in case of a loss ₹ 1,50,000 or at the rate of 90 per cent of the bookprofit, whichever is more; (b) on the balance of the book-profit At the rate of 60 per cent: Provided that is relation to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on the l day of April, 1993, the terms of the partnership deed may, at any time during the previous year, provide for such payment. 9. The contention of the Assessing Officer is that the CBDT in circular No. 739 dated 25/03/1996 has clarified the position of the salary/remuneration paid to partners as provided u/s 40(b)(v) of the Act. The Ld. Assessing Officer observed that the remuneration to the partners should either be quantified or manner of the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer as well as Ld. CIT(A) on this issue is not correct. The partnership deed has specified that the amount of remuneration allowable u/s 40(b)(v) would be the amount of remuneration paid to the partners and same would be shared in their profit-sharing ratio in that year. The profit-sharing ratio of the partners has been specified as 2/3rd ( Sh Rajiv K Luthra) and 1/3rd ( Sh Mohit Saraf). The assessee accordingly paid total remuneration of ₹ 45,00,000/-in the profitsharing ratio to both the partners. In our view, the clause of the partnership deed satisfies the requirement of the CBDT circular (supra) and there is no violation on the part of the assessee in this regard. 11. Further the ratio in the case of Sood Brij associates (supra) also does not apply in the case of the assessee as in the said case, according to the partnership deed , the remuneration to partners was left to payable for future mutual agreement, whereas in the instant case remuneration has been paid in the profit-sharing ratio of the partners . The relevant part of the decision is reproduced as under: (Paragraph 7 8) Clauses 7 of the partnership deed dated 1st May, 1976 reads as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Supra). The relevant part of the decision is reproduced as under: [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 and circumstances of the case. 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 been computed in terms thereof The Court additionally notes that under Section 28(v) of the Act, any salary or remuneration by whatever name called received by partners of a firm would be chargeable to tax under the head profits and gains of business or profession. The proviso to Section 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 (lA) 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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