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TMI Blog2013 (10) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. M/s. Shree Labdhi Prints 2012 (11) TMI 442 - CESTAT, AHMEDABAD ] - additional income for taxation during the course of survey is accepted as business income of the assessee and there is no bar in the Act from claiming partners remuneration on such additional business income – the order of the learned CIT(A) reversed and the AO is directed to allow the claim of the assessee – Decided in favour of Assessee. - ITA No. 1185/Ahd/2010 - - - Dated:- 27-9-2013 - Shri B. P. Jain And Shri Kul Bharat,JJ. For the Petitioner : Shri K. C. Mathews, Sr DR For the Respondent : Shri M. K. Patel, A. R. ORDER Per Shri B. P. Jain, Accontant Member :- This appeal of the Assessee arises from the order of learned CIT(A)-II, Surat, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion debited was very much in excess of what normally should have been paid. Such excess remuneration was paid in order to reduce the tax liability arising out of the disclosure made during the survey. The AO thus worked out the admissible salary u/s. 40(b) at Rs.4,98,380/-, and consequently disallowed the balance sum of Rs.2,01,620/- under the provisions of Sec. 40A(2)(b) of the IT Act. Learned CIT(A) has confirmed the action of the AO. 3. Learned counsel for the assessee invited our attention at page 4 of the AO's order where the assessee has declared the undisclosed stock as well as cash, which was generated from routine business activity, in the regular course of business. The said stock and cash declared has been claimed as a busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has made a disclosure of Rs.83,47,554/-. The AO has observed that the assessee has paid remuneration to the partners of Rs.7 lacs which is higher as compared to the preceding year. The assessee made the explanation which were considered by the AO but the explanation of the assessee was not accepted and accordingly the AO added back Rs.7 lacs salary paid to the partners to the book profit and allowed salary u/s. 40(b) amounting to Rs.4,98,380/- thus disallowing the balance sum of Rs.2,01,620/-. The assessee has submitted that he has declared the undisclosed stock as well as cash which was generated from routine business activity in the regular course of business and the same was found only from the business premises which was not recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head of business and profession. According to him, if the income declared during the source of survey is excluded from the business income, the net profit of the firm was negative, and therefore no remuneration to partners as envisaged u/s. 40(b) was allowable. The AO vide order dated 31.7.2008 passed u/s. 143(3) r.w.s. 147 disallowed the aforesaid remuneration and determined the total income at Rs.73,68,780/-. Aggrieved by the order of the AO, the assessee preferred appeal before CIT(A). Before CIT(A) the assessee contended that based on the documents found from the premises of the assessee, disclosure was made under the head income from business. Once it is considered as business income then the remuneration to partners has to be computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness profits. Accordingly, the Ld. DR. urged that the order of AO be sustained." 6. In the facts and circumstances of the present case and the decision pronounced referred to in the order of ITAT 'C' Bench Ahmedabad in the case of M/s. Shree Labdhi Prints (supra), we are of the view that additional income for taxation during the course of survey is accepted as business income of the assessee and there is no bar in the Act from claiming partners remuneration on such additional business income. Accordingly, we reverse the order of the learned CIT(A) and direct the AO to allow the claim of the assessee. Hence, the grounds of the assessee are allowed. In the result the appeal of the assessee in ITA No.1185/Ahd/2010 is allowed. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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