9911796707
TMI Blog2000 (10) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... is being actor in two films made by the said firm. The remuneration received by the assessee as cine actor from the said firm aggregated to Rs. 6,50,000. Assessment of the firm was completed under s. 143(3), in which AO disallowed the remuneration received by the assessee as cine actor by invoking the provisions of s. 40(b). Consequent to the assessment of the firm, share income of the appellant was computed at a sum of Rs. 6,14,519. The said firm challenged the assessment in appeal and as a result of the appellate order passed by the CIT(A) in the case of the firm, disallowance of Rs. 6,50,000 paid to the assessee as cine actor was allowed by holding that s. 40(b) does not cover remuneration paid for extra services rendered. We have been g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated before the learned CIT(A), he has deleted the addition of Rs. 6,50,000 made by the AO in the order under s. 155, by observing as under: "I have duly and carefully considered the contentions urged by the appellant s representative. There is considerable force in them. While disposing of the appeal in the case of M/s Ramakrishna Cine Studios for the asst. yr. 1987-88 in ITA No. 401/AC 1(3)/CIT(A)-I/89-90 dt. 19th Oct., 1990, the CIT(A)-I, Hyderabad deleted the addition of Rs. 6,50,000 representing the remuneration paid to the appellant, made by the AO under s. 40(b) of the Act. The AO has brought this sum to tax in the hands of the appellant while passing order under s. 155 of the Act to revise the share income from the said firm. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e included in the total income of the assessee-partner and s. 67 does not distinguish between different types of remuneration received by a partner from the firm. It was further pleaded by the learned Senior Departmental Representative that if the income of Rs. 6,50,000 is not taxed in asst. yr. 1987-88 i.e., the year in question and in subsequent year, it will tantamount to the income not having been taxed at all. He pleaded that even if it is held that the AO s action in including the said income in the order under s. 155 was not strictly in accordance with law, but by virtue of operation of s. 292B, any income cannot be allowed to be untaxed merely because the AO has taxed it in an order passed under a particular section and has not invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the plain reading to the text of s. 155(1), which is reproduced hereunder: "Sec. 155(1) Where, in respect of any completed assessment of a partner in a firm for the assessment year commencing on the 1st day of April, 1992, or any earlier assessment year, it is found (a) on the assessment or reassessment of the firm, or (b) on any reduction or enhancement made in the income of the firm under this section, s. 154, s. 250, s. 254, s. 260, s. 262, s. 263 or s. 264, or (c) on any order passed under sub-s. (4) of s. 245D on the application made by the firm, that the share of the partner in the income of the firm has not been included in the assessment of the partner or, if included, is not correct, the AO may amend the order of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income thereof. In the present proceeding under s. 155, the ITO not only purported to add the enhanced share of profit but also to add a huge amount as income from other sources to the total income of the petitioner. This was wholly beyond the scope of the authority under s. 155." Therefore, we hold that the action of the AO in including the income of Rs. 6,50,000 in the order under s. 155(1) was beyond his jurisdiction and is, therefore, liable to be deleted as illegal. On merit also, we hold that since the method of accounting followed by the assessee in respect of his professional income was cash method of accounting, as accepted by the Revenue in the order for asst. yr. 1989-90, dt. 5th Feb., 1999, framed in assessee s own case, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
