TMI Blog2018 (10) TMI 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... ot correct in making this addition. The order of the CIT(A) is set aside. Disallowance out of remuneration paid to partners - computation of book profit for the purpose of admissibility of remuneration u/s 40(b)(v) - HELD THAT:- The assessee firm had no other source of income except income from trading of marbles, granite, tiles etc. during the year under consideration as is appearing from the audited financial statement and audit report for the concerned year. Besides that on survey proceedings no documents were found by the Revenue Authorities which revealed that the assessee firm was involved in other business activities as well. Therefore, we are of the opinion that the CIT(A) as well as Assessing Officer both are not correct in restricting the remuneration of the partners. Appeal of the assessee is allowed. - Shri R.K. Panda, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Appellant : Shri R. B. Doshi, CA. For the Respondent : Smt. Anubhaa Goyal, DR. ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order of the CIT(A) -1, Raipur (CG), dated 30.11.2015 for the A.Y. 2010-11. 2. The grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to its regular income. On verification of accounts the A.O. noted that as against the total sum of Rs. 45,01,396/- the assessee has included an amount of Rs. 40,01,396/- only in the accounts and retracted from surrender of Rs. 5,00,000/- made on account of entries in the loose papers. The assessee s contention was that the disclosure was made by brother of one of the partners who looks after the business in absence of the partner and that the disclosure in respect of excess cash, excess stock and investment on renovation of office was correctly made and he was not well aware of the business affairs. However, the Assessing Officer observed that the explanation filed by the Assessee in respect of the entries appearing in loose papers were not acceptable and added an amount of Rs. 1,21,377/- covered in transactions appearing in loose papers. Regarding the disallowance of remuneration paid to the partners, the Assessing Officer observed that an amount of Rs. 4,80,000/- was found debited towards payment of remuneration to partners which is much more than the permissible monetary limit as prescribed as laid down u/s 40(b)(v) of the Income Tax Act, 1961. The Assessing Officer held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, he had surrendered investment on renovation of office at Rs. 6,00,000/- and Rs. 5,00,000/- for undisclosed income with reference to entries recorded in loose papers found and impounded on survey as per his own estimation. 6. As regards to Ground No. 3, the Ld. AR submitted that the Assessing Officer has disallowed Rs. 3,53,966/- out of remuneration paid to partners as per terms of deed and with prescribed limit u/s 40(b) by treating income surrendered on survey and incorporated in the books of account of Rs. 40,01,396/- as not come within the ambit of book profit in terms of Section 40(b), being assessable as deemed income u/s 69 by following decision of jurisdiction Hon ble CG High Court decision in case of Danush General Stores Vs. CIT 339 ITR 651 by ignoring detailed submission of the assessee firm in this regard and without considering facts and circumstances of the case properly and judicially. 7. The Ld. DR relied upon the order of the CIT(A) as well as Assessing Officer. 8. We have heard both the parties and perused the material available on record. As regards to Ground Nos. 1 2, it is pertinent to note that the CIT(A) has made categorical finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see firm in computation of total income for A.Y. 2010-11 disclosed the surrendered amount of Rs. 40,01,396/-. As far as the decision cited from the side of the Revenue and relied by the CIT(A) in the order that of the decision of the Hon ble CG High Court in case of Danush General Stores Vs. CIT 339 ITR 651 is concerned, the issue before the Hon ble High Court was not the claim of remuneration, but it was limited to the issue of taxability of excess stock found at the time of survey, which was held as unexplained investment. If the issue of allowance of remuneration was taken up by the Hon ble High Court, then the matter could have been looked into in the perspective of computation of book profit for the purpose of admissibility of remuneration u/s 40(b)(v) of the Act. Thus, the decision of the Hon ble High Court is altogether on different aspect and not on the issue contested before us. The Ld. AR relied upon the Tribunal decision in case of ACIT vs. M/s Ashok Chand Anil Kumar (ITA No. 353/Nag/2007 A.Y. 2004-05 order dated 31.07.2014) wherein the issue of remuneration arose and the decision of the Hon ble High Court has been considered. The Tribunal held therein as under: 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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