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TMI Blog2020 (12) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... s order. The claim of interest to partners (on their capital), at ₹ 2,49,557, forms part of the sum of ₹ 5,69,330 directed to the examined afresh by the ld. CIT, and indeed disallowed per the impugned assessment u/s. 143(3) r/w s. 263. No adjustment to the returned income on account of interest and remuneration to partners, it held, is called for. As order accordingly clarifies that the business income will remain the same, i.e., as originally assessed (at ₹ 14,47,620), which is after deduction of both interest and remuneration to partners, so that the only adjustment that obtains, post its order, is for ₹ 1,77,273, assessable u/s. 56. The reference to salary to partners is in view of section 40(b)(v), which limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent aspects of the assessee s return/affairs, aggregating to ₹ 5,69,330, qua which, in the opinion of the revision authority, the assessment as made was deficient, inasmuch as the AO had: (a) not brought to tax other income of ₹ 1,77,273/-, being Jeep rent (₹ 59,299) and bank interest (₹ 1,17,974/-); (b) allowed the assessee interest and remuneration to partners at ₹ 3,79,557/-, as debited to the profit and loss account, even as net profit of the business had been estimated by him, implying deduction of all expenses, so that there was no scope for separate deduction qua any expenditure; (c) not bringing the profit on receipt of ₹ 2,50,000, i.e., at the rate of 5% or ₹ 12,500/-, to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remarks. The same, read with para 6, reads as under: 5. The only adjustment, therefore, that obtains consequent to the set aside by the ld. CIT is the assessment of ₹ 1,77,273/- as income from other sources u/s. 56, i.e., as assessed. The assessee s business income shall continue to be at ₹ 14,47,620/-, i.e., as original assessed. We are conscious that the allowance of deduction for remuneration to partners, allowed at ₹ 1,30,000, is to be w.r.t. book profit ( Explanation 4 to s. 40(b)(v)), so that the enhancement in income upon estimation would have no bearing on the quantum of the said deduction. The same, however, has been considered w.r.t. the assessee s book profit, and found allowable at the claimed amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , revised to 8%, or for regarding it as having been made after the allowance of interest and salary to the partners, so as to preclude their allowance, as argued by the Revenue. No adjustment in respect thereof is accordingly called for. Clearly, therefore, no adjustment to the returned income on account of interest and remuneration to partners, it held, is called for. Para 5 of its order accordingly clarifies that the business income will remain the same, i.e., as originally assessed (at ₹ 14,47,620), which is after deduction of both interest and remuneration to partners, so that the only adjustment that obtains, post its order, is for ₹ 1,77,273, assessable u/s. 56. The reference to salary to partners in para 5 is in v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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