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TMI Blog2015 (9) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts in A.Y. 07-08 & 09-10 were considered as non business income by the A.O. and thereafter after excluding it, the remuneration was worked u/s. 40(b)(v) but the addition made by the A.O was deleted by ld. CIT(A) . Before us, no material has been placed on record by the Revenue to demonstrate that the decision of the ld. CIT(A) for A.Y.20 07-08 & 2009-10 has not been accepted by the Revenue. See case of Md. Serajuddin & Brothers [2012 (8) TMI 104 - CALCUTTA HIGH COURT] A.O was not justified in working out the claim of remuneration after excluding the interest income. We thus direct the A.O to include the interest income while calculating the remuneration payable to partner u/s. 40(b)(v) of the Act - Decided in favour of assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it loss account for the purpose of computing remuneration payable to the partners. The Id. CIT (A) ought to have deleted the disallowance. 4. During the course of assessment proceedings, A.O noticed that Assessee had earned interest income of ₹ 9,83,256/- which included interest of ₹ 1,52,277/- earned from Neo Plast Engg. Pvt. Ltd. He was of the view that the remaining interest of ₹ 8,30,979/- was in the nature of non business income and taxable under the head income from other sources and was to be excluded for the purpose of calculation of remuneration payable to partners. He therefore, after excluding the aforesaid interest of ₹ 8,30,979/-, worked out the remuneration payable to the partners as per the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only from the business income of the firm. 2.3 It is evident from the definition of book profit as given in the aforesaid Explanation-3 that the profit and loss account for the purposes of book profit will be computed in the manner laid down in Chapter IV-D of the Act. As per Chapter IV-D of the Act, the income and expenditure as mentioned in sec. 28 to 44DB will only be considered for arriving at the profits and gains of business or profession. The Assessing Officer had noticed that the assessee had shown interest income of ₹ 9,83,256/- as business income in the profit and loss account and claimed the partner's remuneration on the said income. He had considered the interest income of ₹ 1,52,277/- received from deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Abraham Company vs. Dy.CIT 325 ITR 201 (Ker,) It was held that interest income from bank deposits is assessable under the head income from other sources where the assessee is not engaged in money lending business. The Himachal Pradesh High Court in the case of Shanta Lat Chopra vs. CIT 214 CTR (HP) 420 had held that the interest on FOR pledged with bank for obtaining loan was assessable as income from other sources and not business income. Similar view was taken by the Hon'ble M.P High Court and Hon'ble Madras High Court respectively in the cases of Ferro Concrete Construction (lndia)(P) Ltd. vs CIT 290 ITR 713 (MP) and CIT vs. Monark Tools (P) Ltd. 260 ITR 258 (Mad.). The Hon'ble Delhi High Court in their later on decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so relied upon. 2.5 Considering the above discussion, I am of the opinion that the Assessing Officer has correctly disallowed the claim of the remuneration to partners on the interest income ₹ 8,30,979/-. The remuneration payable to the partners had been correctly worked out by him for ₹ 16,64,280/-. The Assessing Officer was thus justified in disallowing the excess remuneration of ₹ 3,28,920/- (Rs. 19,83,200/- - ₹ 16,54,280/-) and his action to this extent is confirmed. The addition so made is sustained. All the grounds of appeal are accordingly dismissed. 5. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 6. Before us, ld. A.R. reiterated the submissions made befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions and perused the material on record. The issue in the present ground is whether the interest income is to be considered for the purpose of calculation of remuneration to the partners. On perusing the assessment order, we find that though the A.O has stated that the interest of ₹ 8,30,979/- is in the nature of non business income and taxable under the head income from other sources but no such adjustment has been made by him while computing the income from business meaning thereby that he has accepted interest income as business income. We further find that interest receipts in A.Y. 07-08 09-10 were considered as non business income by the A.O. and thereafter after excluding it, the remuneration was worked u/s. 40(b)(v) but t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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