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TMI Blog2015 (8) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax under the head profits and gains of business or profession. The proviso to Section 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted to the extent of the amount not so allowed to be deducted. Further Section 155 (1A) states that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with a view to adjusting the income of the partner to the extent of the amount not so deductible. A conspectus of these provisions makes the opinion the ITAT consistent with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Ms. Kavita Jha, Advocate. ORDER 1. This appeal under Section 260A of the Income Tax Act, 1961 ( Act ) by the Revenue is directed against an order dated 5th July 2013 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 1382/Del/2012 for the Assessment Year ( AY ) 2009-10. 2. The first issue sought to be projected by the Revenue in this appeal is whether the ITAT was correct in law in deleting the addition of ₹ 6,05,91,909 made by the Assessing Officer ( AO ) to the income of the Respondent Assessee firm on the ground that the remuneration paid to the partners of the Respondent Assessee firm was not in accordance with the provision of Section 40(b)(v) of the Act. 3. The Respondent Assessee firm was initiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrears and the salary so paid shall be treated as working expenses of the partnership before the profits thereof are ascertained. 6. It is seen in the assessment order dated 30th December 2011 for the AY 2009-10 that the AO took exception to Clause 6 of the partnership deed dated 22nd June 2008 as regards the formula for the computation of the salary of the partners. The Assessee explained to the AO that in terms of the Section 40(b)(v) of the Act, the Assessee had paid 40% of the net profits in the ratio of partners share of profit to the partners respectively as salary. The AO concluded that since the partnership deed neither specified the amount of salary to be paid to each of the working partners nor has laid down a specific metho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent Assessee, the Court finds no reason to take a view different from the one taken by the ITAT in the facts and circumstances of the case. Clause 6(a) of the partnership deed dated 20th June 2008 clearly indicates the methodology and the manner of computing the remuneration of partners. The remuneration of the partners has been computed in terms thereof. The Court additionally notes that under Section 28(v) of the Act, any salary or remuneration by whatever name called received by partners of a firm would be chargeable to tax under the head profits and gains of business or profession. The proviso to Section 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear under consideration paid ₹ 25 lakhs towards first instalment. During the financial year 2008-09 it paid the second and final instalment of ₹ 19 lakhs as agreed contribution and debited the said sum in its profit and loss account. 11. The AO held the payment of ₹ 19 lakhs made by the Assessee as aforementioned was not for business purposes. However, since the payment was recognised under Section 80 G of the Act, 50% was allowed to be deducted and 50% was added back to the income of the Assessee. The CIT (A) upheld the order of the AO. 12. In the impugned order, the ITAT has accepted the explanation of the Assessee that the IFA was a professional body and a non-profit organisation engaged in the study of internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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