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TMI Blog2022 (5) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... e case are that the revenue has taken following grounds of appeal, which is reproduced here in below: "1. Whether on the facts and circumstances of the cases, the learned CIT(A) NFAC, Delhi was justified in allowing the appeal of the assessee by deleting the disallowance of Rs. 5,80,000/- made by the AO on account of excess remuneration paid to partners in contravention of section 40(b)(v) of the Act and beyond the provision under the partnership deed. 2. The appellant craves to add, amend, alter, delete or modify the above ground of appeal before or at the time of hearing." 4. The only ground in this appeal raised by the department, is an action of NFAC deleting an amount of Rs. 5,80,000/-made by AO alleging that there is an excess pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the AO, assessee preferred an appeal before the CIT (A), Ajmer. The appeal was subsequently migrated to NFAC. The Ld. CIT(A) NFAC vide his order Appeal No. 10995/2018-19 dated 17.05.2021 has dismissed the appeal of the assessee. 5. Since, this case is a subject matter of Revenue Audit Objection and it is covered in the exceptional clause mentioned in Circular No. 03/2018 dated 11.07.2018 issued by the CBDT and its amendments dated 20.08.2018 and 08.08.2019., the undersigned is of the humble opinion that further appeal should be maintained in this case even the tax effect in this case is below the monetary limit is below the tax limit prescribed by the CBDT for filing further appeal." 7. We have pursued the circular, submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has proceeded to pass rectification order dated 28.01.2019. 10. Aggrieved from the said order of the Assessing Officer passed u/s 154 of the I.T. Act. The assessee has preferred the appeal before the ld. CIT(A) raising two grounds which are as under:- "The appellant has challenged the said order with the following grounds of appeal: 1. That the AO was not justified in law and on facts of the case in passing the rectification order u/s 154 without providing opportunity to the assessee. 2. That the AO grossly erred in law and on facts of the case in holding that Rs. 3,00,000/- is maximum remuneration limit as per I.T. Act and disallowing so called excess remuneration paid to working partners u/s 40(b). " 11. The ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his respect, the AO in the rectification order has observed as under:- "Assessment in this case for the AY 2014-15 was made u/s 143(3) on 19.12.2016 on the total income of Rs. 21,41,746/-. Subsequently, it has come to the notice that the remuneration amounting to Rs.8,80,000/- was allowed to partner but Rs.3,00,000/- is maximum remuneration limit as per Income Tax Act, 1961. Thus, the excess remuneration amounting to Rs. 5,80,000 is not allowable. Therefore, notice u/s 154 was issued to the assessee firm on 06.07.2018 which was duly served upon the assessee pointing out to the proposed rectification to the mistake. In response to the said notice the assessee firm has not offered any explanation in this regard which indicates that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the Assessing Officer. Therefore, the action of the ld. CIT(A)/NFAC is not in accordance with law and the action of the assessee is nothing but and afterthought there are no such mention of the supplementary deed in the audit report for year under consideration and therefore, the ld. DR argued that the action of Assessing Officer should be confirmed and the order of ld. CIT(A) be quashed. 13. On the contrary, the ld. AR appearing for the assessee submitted that copy of the supplementary deed which is executed on 1st April, 2011 at assessee's paper book and also filed the copy of the audit report for Assessment Year 2012-13 wherein there is allowance higher remuneration based on the change in remuneration clause in partnership deed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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