TMI Blog2005 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of s. 40(b), Expln. 3, for the purpose of this clause 'book profit' means the net profit, as shown in the P L a/c for the relevant previous year, computed in the manner laid down in Chapter IV-D, as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm, if such amount has been deducted while computing the net profit. There is no dispute to the fact that net profit of the assessee-firm was inclusive of the profit earned in the course of business, found to be invested in the stock. We, therefore, find ourselves inclined to agree with the learned AR that source of stock was out of business income and which was not controverted by the Department by bringing any material on record, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deduction under s. 40(b), in respect of remuneration to the partners after deducting income disclosed at the time of survey from the profit of the business. The AO was of the view that income disclosed by the assessee was assessable under s. 69 and was not business income on which remuneration to the partners was to be allowed as per provisions of s. 40{b) of the IT Act. 4. By the impugned order, CIT(A) observed that during the course of survey, the assessee had claimed excess stock out of business income of current year and, therefore, the assessee has duly explained the source of investment in the stock out of the business profits. As per the findings recorded by the CIT(A), the assessee was carrying on the business of gold and silver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authorised Representative, under the provisions of s. 40(b), remuneration has to be computed on the book profit and the book profit was inclusive of the profits which were recorded in the books of account and disclosed to the Department in the P L a/c filed along with the return of income. As per learned Authorised Representative, the assessee was not found to have earned the income from any source other than the business of gold and silver ornaments alleged to be carried out during the year and the excess stock was also pertaining to the same business. Therefore, as per learned Authorised Representative, the CIT(A) was perfectly justified in computing the deduction under s. 40(b) on the book profit which was inclusive of profit found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to dispute the assessee's version as to the source being business income. No material has been brought on record by the Department to disprove the assessee's contention regarding source of business income which was out of business of gold and silver ornaments. It is also not the case of the Department that assessee was doing some other activities in which such income was earned and alleged to be invested in the gold and silver ornaments in which the assessee was dealing. As per provisions of s. 40(b), Expln. 3, for the purpose of this clause 'book profit' means the net profit, as shown in the P L a/c for the relevant previous year, computed in the manner laid down in Chapter IV-D, as increased by the aggregate amount of the remuneration p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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