9911796707
TMI Blog2008 (3) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... question of law : "Is the hon'ble Income-tax Appellate Tribunal, in the facts and in the circumstances of the case legally correct in allowing interest and salary to partners when there is a clear finding of fact that books of account are maintained on cash basis and that no payments have been made to the partners ?" 2. The respondent is a firm and a civil contractor. Return for the Rs. 12,990. In the return, income was worked out by adopting 10 per cent. of the assessment year 2001-02 was filed on March 9, 2002, declaring an income of gross receipts of Rs. 78,57,707 as income and further reducing the interest paid to partners, salary to partners and depreciation, thereby arriving at the net taxable income of Rs. 12,990. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since the Assessing Officer had rejected the book results and applied a rate of 12 per cent. on gross receipts, deduction on account of salary and interest as permissible to the assessee on the basis of the terms and conditions of the partnership deed. 4. Aggrieved against the said order, the Revenue filed the appeal before the Income-tax Appellate Tribunal, Chandigarh questioning the deduction on account of salary and interest allowed to the partners of the assessee. The Revenue also contested the directions of the Commissioner of Income-tax (Appeals) to assess only 12 per cent. of profit in respect of difference as per the revised return receipts. The Tribunal vide impugned order dated January 25, 2007, dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by the Department. In regard to the assessment of income pertaining to difference in receipts, the profit having been determined by application of a flat rate, the difference in payments, does not justify the different treatment. It is not a case of an assessee, who has maintained regular books of account and the result disclosed having been accepted by the Department in which case the difference in receipts would have been the impact of enhancing the income to the extent of such difference. Therefore, in the present case, regular books of account not having been maintained and a flat rate applied, the extra payment receipt by the assessee deserved the same treatment as other payments. 8. In view of the above, the question raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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