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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 ..... 8-09 on 25.09.2008 declaring total income of Rs. 28,48,230/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 28.04.2010 and the total income was determined at Rs. 31,82,150/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 04.07.2011 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following effective ground;- 1. Ld. CIT (A) erred in law and on facts in confirming disallowance by AO of Rs. 3,28,920/- treating remuneration paid to the partners under the provisions of section 40(b)(v) of the Act as excessive. Both the lower authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon by the Ld. Counsel. It can be seen from the assessment order that the assessee has claimed the remuneration to partners from the net profit shown in the profit and loss account whereas the remuneration to partners is allowable to the working partners from the book profit which is authorized by and is in accordance with the terms of the partnership deed. The "book profit" has been defined in Explanation-3- below sec. 40(b) of the Act which reads as under: Explanation-3 - For the purpose of this clause, "book profit" means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of remuneration paid or payable to all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus funds of the firm in deposits with others and in FDs will be income from other sources and not the business income because earning of interest is not the business of the appellant firm. The Hon'ble Rajasthan High Court had held in the of Murli Investment Co vs. CIT 167 ITR 368 (Raj.) that merely investing surplus funds instead of keeping them idle and obtaining interest thereon would not constitute business and therefore, the interest by the assessee would not be assessable as business income but assessable as income under other sources. The Hon'ble Kerala High Court in the case of CIT vs. Venad Conductors (P) Ltd. 326 ITR 513 (Ker.) had held that income from short term deposit cannot be treated as income from business but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessarily be treated as income from other sources and not business income. 2.4 In view of the law laid down by the various High Courts as referred to above, the interest income is considered as "income from other sources" and therefore, no remuneration to partners will be allowable on this interest income. The Ld. Counsel has neither furnished the copy of the partnership deed nor established as to how the decisions relied upon by him are applicable in the facts of appellant's case. The-Hon'ble Amritsar Tribunal had held in the case of Shree Balaji Alloys vs. ITO [2010] 127 TTJ 129 (ASR) that a decision of the court is applicable to the case unless it is clearly demonstrated that there is similarity of the facts. Thus, the Ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of ld. CIT(A) has not been challenged by the Revenue. She placed on record at page 6 to 17 the copy of the order of CIT(A) for A.Y. 07-08 & A.Y. 09-10. She further placed reliance on the decision of Ahmedabad Tribunal in the case of DCIT vs. Ajay Engineers (ITA No. 2772/A/2012 order dated 07.06.2013). She therefore submitted that when facts of the case in the year under appeal are identical to that of earlier year and subsequent year and when the order of ld. CIT(A) has been accepted by Revenue, there was no reason for the Revenue to take a different view in the year under consideration. She therefore submitted that the addition needs to be deleted. Ld. D.R. on the other hand supported the order of A.O and ld.CIT(A). 7. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be done as provided under Section 30 to 43D. By virtue of Section 5 of the said Act that total incomes of any previous years includes all income from whatever source derived. Thus for the purpose of Section 40(b)(v) read with Explanation there cannot be separate method of accounting for ascertaining net profit and/or book-profit. The said section nowhere provides as rightly pointed by Mr. Khaitan, learned Senior Advocate that the net profit as shown in the profit and loss account not the profit computed under the head profit and gains of business or profession." 8. Before us, Revenue has not brought any contrary binding decision in its support nor could demonstrate as to how the ratio of aforesaid decision of Hon'ble Calcutta High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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