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TMI Blog2001 (12) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... o the partners. 3. The DC(A) ought to have upheld the adjustment made under section 143(1)(a) by way of disallowance of remuneration paid to the partners, inasmuch as, with reference to the material available on record as on the date of processing the return under section 143(1)(a) of the Income-tax Act there was no mistake apparent from the record, which required to be rectified under section 154 of the income-tax Act for the reason that the codicil dated 18-2-1993 was not a part of record as on the date and it was filed subsequently. 4. Without prejudice to the above, the DC(A) ought not to have directed the allowance of remuneration to the partners as authorised by the codicil dated 18-2-1993 for the reason that a codicil cannot have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,657 the income admitted by us, we submit that there is a Codicil Agreement, authorising partners to take remuneration. We are enclosing herewith a copy of the said Codicil Agreement for your kind perusal. We request your goodself to kindly allow the remuneration of Rs. 36,000 paid to the partners as per the statement filed before your goodself, rectifying your intimation sent under section 154 of the Income tax Act and oblige. (2) We submit that the Codicil Agreement could not be sent earlier by our Auditor's office inadvertently. Therefore, we request your goodself to kindly do the needful as requested above and oblige. (3) ..............." A photocopy of the codicil dated 18-2-1993 was enclosed to the above application under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Firm was wound up, and it was difficult to get the signatures of all the partners in time, that the Assessing Officer should have given an opportunity to the appellant Firm in order to enable all the partners to certify the Partnership Deed, and that the disallowance of remuneration to partners in such a summary manner was against to the principles of natural justice. It is seen that the appellant Firm has made a petition under section 154 enclosing the Partnership Deed, but the same happens to be a photostat copy and has not been apparently certified by all the partners. Therefore, the only lapse on the part of the appellant is that the codicil was not certified by all the partners. The appellant could have obtained signatures, if gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that even the so-called Codicil filed along with the application under section 154 was not a certified copy, and so violative of the provisions of section 184 of the Income-tax Act. Therefore, even if the said Codicil was to be taken into consideration, the assessee was not entitled for the deduction of the remuneration. It is also contended that the Codicil itself was executed on 18-2-1993, and so, it could not have any retrospective effect, to authorise the partners to claim remuneration for the period prior to 18-2-1993. So, it is contended that the Deputy CIT(A) was not justified in giving direction to the Assessing Officer to obtain the signatures of the partners On the Partnership Deed or Codicil, and allow the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-firm was not entitled for the deduct ion of the remuneration to partners. If the assessee had inadvertently omitted to file the Codicil, he should have approached the Commissioner under section 264. The provisions of section 154 are meant for the rectification of the mistakes apparent from record in the orders passed by the Assessing Officer. When there is an omission on the part of the assessee, to our mind, recourse cannot be made to the provisions of section 154, as was done by the assessee in the present case. This is the view taken by the Mumbai Bench of the Tribunal in Mrs. Freny S. Contractor v. Deputy CIT [2000] 245 ITR (Trib.) 83. 8. The Board Circular No. 739 dated 25-3-1996, relied upon by the Deputy CIT(A) in the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where neither the amount has been quantified nor even the limit of total remuneration has been specified but the same has been left to be determined by the partners at the end of the accounting period, in such cases payment of remuneration to partners cannot be allowed as deduction in the computation of the firm's income. 4. It is clarified that for the assessment years subsequent to the assessment year 1996-97, no deduction under section 40(b)(v) will be admissible unless the Partnership Deed either specifies the amount of remuneration payable to each individual working partner or lays down the manner of quantifying such remuneration. 5. The above clarification may be brought to the notice of all the Assessing Officers of your region. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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