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TMI Blog2012 (7) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... n-law. 2. For that the order of assessment appears to have been back dated and hence is barred by limitation for although the same is dt.24.12.2010 ,that the same was not ready for service till 30.01.2011. 3. For that the addition of Rs.11,52,000 by way of disallowing the claim of 'Remuneration to Partners " is wholly unjustified and the learned A.O. as well as the learned Commissioner failed to appreciate the submissions and explanation furnished by the appellant. 4. For that the addition of Rs.63,84,528 by disallowing claim of expenditure under head Drivers' Commission" is arbitrary and unjustified . The learned Commissioner failed to appreciate the submission of the appellant. Moreover the learned Assessing Officer submitted the Reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in their bills by the contractee themselves. In other words, the payments were reimbursed were not to be part of the bills rendering income to the assessee. However, the assessee had not reduced the sum of Rs.63,84,528 from the transportation charges received amounting to Rs.28.38 Crores. But claimed separately The Assessing Officer held this amount as drivers commission not allowable holding a view that he ought to have deducted tax at source u/s.194H of the I.T.Act,1961. 4. Aggrieved, the assessee appealed before the first appellate authority who considered the case of the assessee appellant before him and confirmed these two disallowances by indicating that Circular No.739 dt.25.3.1996 of the CBDT instructed that when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners (copy produced) who have inscribed the name of work rendered by the partners entitled for remuneration of Rs.6 lakhs each. Therefore, it was nobody's case to deny the remuneration when the revenue stands to gain by receiving more tax, other than the firm tax, which was the intention of the legislation that had been brought on the statute w.e.f. AY 1993-94. The Circular, therefore only identified that a firm if pays remuneration to its partners has to inscribe the amount quantified before the beginning of the year when there is a change in the partnership. Here, the Assessing Officer himself has held the firm as a registered partnership as such with copy of resolution being part of the Deed therefore could not disturb the remunerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, the learned CIT(A) ought to have accepted the fact that the reimbursement was purely a goodwill gesture on the part of the assessee who ought to have reduced the same from the gross receipts amounting to Rs.28.38 Crores when he chose to claim the same separately in the P & L account amounting to Rs.63,84,528 being the accounting standard under the mercantile system of accounting. He submitted that both these additions may be directed to be deleted as disallowance thereof has no basis in the eyes of law as per the facts and circumstances which both the authorities below have found uncontroverted. 6. The learned DR submitted that the learned CIT(A) has confirmed the disallowance on the basis of facts and findings brought on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer in ITA No 4 of 2005 dt.11.3.2011 (supra), which is squarely applicable to the issue on hand and has been relied on in another the decision of ITAT, Cuttack Bench in the case of Asst.Commissioner of Income-tax v. Dr. Sarojini Pradhan in ITA No.393/CTK/2011 , wherein under similar circumstances, the Tribunal held that the refusal to allow remuneration to the partners would result in holding the firm as un-registered firm which was not the case of the Assessing Officer. Having set a limit on firms income, the salary or remuneration to the partners can be varied by passing necessary resolution and would have to be inscribed in the books of account as such. It is not the case of the assessee to have claimed only Rs.2000 per month which appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both but at the same time rather justices the contention which has been brought out otherwise for taxation or disallowance at source under the provisions of Section 194H. The trucks were not belonging to the assessee, the drivers were not employed with the assessee and it was the expenditure incurred by the contractee when the bills were raised including this amount which the assessee before us has claimed below the line as drivers' commission. This peculiar disclosure in the P & L account ought to have been considered by the Assessing Officer in the light of the fact that the assessee does not have own trucks as per the Schedule of fixed assets filed along with the return. This would clarify the situation that the amount of expenditure as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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