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Issues involved: Appeal against deletion of addition of Rs. 51,01,510/- on account of non-deduction of TDS on commission paid to partners for assessment year 2008-09.
Summary: 1. The Revenue appealed against the deletion of an addition of Rs. 51,01,510/- due to non-deduction of TDS on commission paid to partners. The Assessing Officer required evidence of TDS, but the assessee argued that TDS was not applicable to such payments to partners as it was an allocation of profit. The CIT(A) deleted the addition based on previous Tribunal orders for assessment years 2006-07 and 2007-08. 2. The Tribunal found that the issue was in favor of the assessee based on a previous order for assessment year 2006-07. The Tribunal held that payments made to partners were allowable deductions in the hands of the firm and were chargeable as profits in the hands of the partners post the Finance Act, 1992 amendments. The Tribunal dismissed the Revenue's appeal, citing consistency with previous orders. 3. The Tribunal reiterated that a firm is a unit of assessment and not a legal person, and therefore, there cannot be a contract of service between a firm and its partners. As per the partnership deed, commission paid to partners was considered remuneration and not subject to TDS deduction. The Tribunal upheld the CIT(A)'s decision and dismissed the Revenue's appeal based on previous consistent rulings. 4. The Tribunal also noted similar findings in the assessment year 2007-08, where the Tribunal followed its earlier decision for 2006-07. Given the consistency in facts and rulings, the Tribunal found no merit in the Revenue's appeal and dismissed it. Judgment: The appeal against the deletion of the addition of Rs. 51,01,510/- on account of non-deduction of TDS on commission paid to partners for assessment year 2008-09 was dismissed by the Tribunal based on the provisions of the Income Tax Act and previous consistent rulings.
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