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TMI Blog2022 (1) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... d, both on facts and in law, in sustaining addition made by the AO by determining assessed income as Rs. 6,08,983/- against the returned income of Rs. 3,08,983/-. 3(i). On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming addition of an amount of Rs. 3,00,000/- made by AO on account of disallowing the partners remuneration u/s. 40(b) of the Income Tax Act, 1961. (ii) That the said additions and disallowances sustained by learned CIT(A) are against facts on record as well as against the statutory provisions of the Act. 4. That the said addition has been confirmed rejecting the explanation and evidences brought on record by the assessee to prove the genuineness of the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny through CASS. In response to the notice issued, the Ld. Counsel for the assessee attended the proceedings. During the course of assessment proceedings, the AO pointed out that as per perusal of the P & L A/c, it revealed that the assessee had received salary from two partners amounting to Rs. 3,00,000/- [@ Rs. 1,50,000/- each to both partners]. The assessee was asked to furnish the Partnership Deed. In response thereto, the Partnership Deed was provided. However, the AO was of the view that the salary has neither been quantified nor the manner of quantifying of such remuneration was described. Therefore, the AO disallowed the partner remuneration of Rs. 3,00,000/- and added the same into the income of the assessee. 5. Aggrieved ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act itself had been incorporated in the partnership deed. This Court held that this itself provides a method of computation. In that case we had not gone into the validity of the CBDT circular. The CBDT circular can only be held to be valid if it is in terms of the main section. As held above, the Section 40(b)(v) only lays down that either the working partner should be paid an amount specified in the partnership deed or it should not exceed the amount laid down in the Section. In the present case the partners have been paid their remuneration/salary strictly in accordance with the terms of the partnership deed and this amount paid to the partners does not exceed the maximum permissible amount and therefore, the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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