TMI Blog2023 (4) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act is to be allowed. We would also like to draw our support to the contention of the assessee that in the earlier years that the said claim was not disputed by the lower authorities for which we would like to place our reliance on the decision of Radhasoami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] for the proposition that when there are no change in facts and when the claim has been allowed in the earlier years without being in dispute, the same may be considered for the impugned year also. As it is observed that the assessee has been claiming the modified remuneration since the amendment of the provisions for which there was no dispute, we are of the considered opinion that the assessee s claim for the impugned year should also be granted. From the above observation we hereby delete the impugned addition and allow the assessee s claim of remuneration to partners as per the amended provision of the Act. Hence, ground no.1 of the assessee is allowed. Violation of principle of natural justice - As no adjudication, as the assessee has been given a relief as prayed for in the previous ground. - ITA No. 2596/Mum/2022 - - - Dated:- 9-3-2023 - Shri Amarjit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was w.e.f. 01.04.2010 which had calculated the remuneration of the partners in accordance with the amended provision of section 40(b)(v) of the Act vide Finance Act (No.2) 2009 314 ITR (St) 57 which came into effect from 01.04.2010 as per which higher remuneration pay out for the partnership firms were allowed. The A.O. failed to consider the submission made by the assessee for the fact that there was no supplementary deed executed as on the date of filing of the returns for the impugned year and also that the assessee has not submitted any such deed until date of issuance of final show cause notice dated 09.03.2021 by the A.O. The A.O. held that the execution of supplementary deed after the issuance of final show cause notice dated 09.03.2021 was only an afterthought and was merely a self serving document filed by the assessee. The A.O. distinguished the cases relied upon by the assessee and has also controverted the assessee s contention that Circular No. 12/2019 dated 19.06.2019 was only for guidance and clarification for the A.O. s. The assessee s contention that the remuneration for partners as per the amended law was considered in the earlier years was also controverted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the assessee s case for A.Y. 2014-15 was assessed u/s. 143(3) of the Act wherein the A.O. had accepted the modification in the working of the remuneration. The ld. AR relied on the decision of the Hon'ble High Court of Himachal Pradesh in the case of Durgadas Devkinandan vs. ITO [2012] 342 ITR 17 (HP), which held that the remuneration of partners should be in accordance with the terms of the partnership deed and the same should not exceed the aggregate amount as laid down in the provisions of the Act. The ld. AR relied on the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT [1992] 193 ITR 321 (SC), which held that the view taken in one assessment year, if not, challenged could be allowed in the subsequent years without being changed. The ld. AR also stated that the partners have duly paid the taxes towards the remuneration received and that, in any case, there is no case of loss of revenue. The ld. AR prayed that the impugned addition may be deleted. 10. The learned Departmental Representative (ld. DR for short) for the Revenue controverted the contention of the ld. AR and stated that the assessee was entitled to deduction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as per the amended provision based on the supplementary deed giving effect retrospectively. For this proposition, we would be placing our reliance on the decision of the Hon ble Allahabad High Court in the case of CIT vs. Alison Singh Co. [2013] 358 ITR 458 (All), which was though on a different facts has upheld the validity of the retrospective effect given to a partnership deed based on a subsequent rectification deed. It has held that as the subsequent deed is executed in accordance with the primary deed, there would be no objection in giving retrospective effect to the subsequent deed. From this, it is evident that the supplementary deed executed by the assessee firm was in accordance with the provisions of the original partnership deed dated 30.07.2005in which clause 9 of the deed of partnership read as under: The clause (9) of the deed of partnership read as under: MODIFICATION OF REMUNERATION The partners shall be entitled to modify the above terms relating to remuneration payable to working partners by executing a supplementary Deed and any such deed payable to working partners by executing a supplementary Deed and any such deed when executed shall h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of remuneration to the working partners and whether the remuneration provided is within the limits prescribed under Section 40(6)(V) or not. If all the aforementioned conditions are fulfilled then he cannot disallow any part of the remuneration on the ground that it is excessive. Since in the present case, all the conditions required has been fulfilled the question of disallowance does not arise. 13. When we are already convinced of the fact that the supplementary partnership deed operates retrospectively, the calculation of the remuneration paid to partners if in accordance with the provisions of the Act is to be allowed. We would also like to draw our support to the contention of the assessee that in the earlier years that the said claim was not disputed by the lower authorities for which we would like to place our reliance on the decision of Hon'ble Apex Court in the case of Radhasoami Satsang (supra) for the proposition that when there are no change in facts and when the claim has been allowed in the earlier years without being in dispute, the same may be considered for the impugned year also. As it is observed that the assessee has been claiming the modi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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