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TMI Blog2021 (3) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... gy and the manner of computing the remuneration of partners. Therefore, this decision also is of no help to the assessee . In this view of the matter and respectfully following the decision of Hon ble Jurisdictional High Court in the case of Sood Brij Associates vs CIT[ 2011 (11) TMI 3 - DELHI HIGH COURT ] relied on by the AO, thus find no infirmity in the order of the Ld. CIT(A) in confirming the disallowance of salary to the working partners - Grounds raised by the assessee are dismissed. - ITA No. 2815/Del/2019 - - - Dated:- 23-3-2021 - SHRI R. K. PANDA , ACCOUNTANT MEMBER Assessee by : Shri Ashwani Kumar, Advocate Department by : Shri Rabin Rawal, Add. CIT (DR) ORDER PER R.K. PANDA, AM This appeal filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Section 40(b) of the Act places some restrictions and conditions on the deductions of expenses available to an assessee assessable as a partnership firm in relation to remuneration payable to partners of such firm. The deductions regarding salary to partners cannot exceed the monetory limits specified u/s 40(b) and are available subject to fulfillment of conditions mentioned therein. The following conditions must be satisfied before claiming any deduction in respect of salary/remuneration to partner by a partnership firm: Partner to be paid must be a working partner Remuneration must be authorized by the partnership deed Remuneration will be allowed as deduction only for that period onwards wherefrom the partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. 5. Before Ld. CIT(A), it was explained that the partnership deed was written on 1.4.1992 and the CBDT circular No. 739 was issued on 25.3.1996. It was explained that the salary paid to the partners is within the permissible limit as prescribed under Income Tax Act. So far as the decision of Delhi High Court in the case of Sood Brij Associates vs. CIT (supra) relied on by the AO is concerned, it was submitted that the said decision is not applicable to the facts of the present case since in that case both the partners were not working partners whereas in the present case both the partners are working partners. 6. However, the Ld. CIT(A) was also not satisfied with the arguments advanced by the assessee and sustained the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that allowable remuneration was ₹ 2,67,676/- in the show cause dated 16.10.2017 and CIT(A) erred in confirming the disallowance. 4. The appellant craves leave to add, alter, amend or vary any of the above grounds during the pendency of the appeal. 8. Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) in confirming the disallowance of salary to partners made by the AO. Referring to the copy of the partnership deed, the Ld. Counsel for the assessee drew the attention of the bench to clause 5 of the partnership deed and submitted that the said clause provides salary to partners in accordance with the proceeding under Income Tax Act 1961. He submitted that the salary paid to the partners is within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed to the working partners. Therefore, the order of the Ld. CIT(A) be upheld and the grounds raised by the assessee should be dismissed. 10. I have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld. CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the AO in the instant case, has disallowed an amount of ₹ 2,88,000/- claimed by the assessee as remuneration to the partners on the ground that the partnership deed does not specify the quantification of remuneration to the partners. Therefore, relying on CBDT circular No. 739 dated 25th March, 1996 and the decision of Hon ble Delhi High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be decided at a future point in time requirements of section 40(b)(v) were not satisfied and, therefore, remuneration paid to partners could not be allowed as deduction under section 40(b)(v) Held, yes [ in favour of revenue] 12. Since in the instant case, the partnership deed does not specify the manner of computation of quantum of remuneration to partners and the same has been left undetermined, undecided and left to the discretion of partners, therefore, I do not find any infirmity in the order of the Ld. CIT(A) in confirming the addition made by the AO. 13. So far as the decision of Mumbai Bench of the Tribunal relied on by the Ld. Counsel for the assessee is concerned, the same is not applicable to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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