TMI Blog2011 (8) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... d other liabilities to the tune of ₹ 74,96,201/- in the balance sheet which could not be accepted as assessee was following cash method of accounting. The AO further noted that similar dispute had arisen in assessment year 2001-02 in which the Tribunal had upheld the additions being increase in sundry creditors during the year in respect of certain items. He, therefore, computed the difference in terms of such items based on order of Tribunal in assessment year 2001-02, which was as under:- Particulars Bal. as at 31.3.05 Add to 31.3.06 Payments/W. back to 31.3.06 Bal. as on 31.3.06 Net figures of items for A.Y. 06-07 as per the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of payment to retired partners and wives of deceased partners under the provisions of partnership deed as diversion of income. During the assessment proceedings, the assessee submitted that retired partners/wives of deceased partners had overriding title on certain percentage of gross fees subject to certain limitation as provided in the partnership deed. The claims had been made under provisions of the deed and therefore, should be allowed as deduction. The AO however, did not accept the contention raised. It was observed by him that payment to expartners or their spouses on their death was not for rendering any professional services for the firm and, therefore, such expenses could be allowed as deduction against the professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee to the retired partners and wives of deceased partners while computing the total income. The payments had been made under the provisions of partnership deed. The same issue had been examined by the Tribunal in assessee s own case for assessment year 2003-04 in ITA No.1113/M/2007. The Tribunal after examination of various clauses of partnership deed noted that retired partners and spouses of deceased partners had an overriding title up to certain percentage of gross fees collected by the firm subject to certain conditions. Thus the provisions of partnership deed created overriding title in favour of these persons on certain percentage of receipts irrespective of the fact whether there was profit or not. The Tribunal obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly indicated that what was paid was by way of price of share of the deceased partner in the partnership deed. The Hon ble High Court accordingly held that at the most it was application of income that had accrued to the assessee and the disallowance of the claim had accordingly been upheld. The facts in case of the assessee are obviously distinguishable and therefore, the said judgment will have no application in the present case. We, therefore, respectfully following the decision of the Tribunal in assessee s own case for assessment years 2003-04 and 2004-05 (supra) set aside the order of CIT(A) and allow the claim of the assessee. 4. The third dispute is regarding disallowance of ₹ 5.00 lacs being payment made to Mr. E.A. Ksh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be allowed. The ld. DR placed reliance on the order of the CIT(A). 4.2 We have perused the records and considered the matter carefully. The dispute is regarding allowability of ₹ 5.00 lacs paid to ex-employee as pension. We find that ex-employee Shri Kshirsagar had been sanctioned pension of ₹ 4.00 lacs w.e.f. 1.4.2004 which had been increased to ₹ 5.00 lacs during the year. The sum of ₹ 4.00 lacs has already been allowed as deduction in Assessment Year 2005- 06. Therefore, allowability of claim is not in dispute. The CIT(A) disallowed the claim on the ground that there was no evidence of agreement of partners to pay increased amount. In our view the claim should not be disallowed on such ground. No amount can ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
