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TMI Blog2022 (10) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of this Tribunal in assessee s own case for AY 2012-13 [ 2019 (2) TMI 512 - ITAT AHMEDABAD] as well as the decision in the case of CIT Vs. J.J. Industries, [ 2013 (7) TMI 577 - GUJARAT HIGH COURT] Respectfully following the said judicial pronouncements, we uphold the impugned order of the learned CIT(A) deleting the addition made by the Assessing Officer on account of disallowance of partners remuneration and dismiss the appeal of the Revenue. - ITA No. 159/Ahd/2022 - - - Dated:- 30-9-2022 - SHRI P. M. JAGTAP , VICE - PRESIDENT And MS. SUCHITRA R. KAMBLE , JUDICIAL MEMBER Assessee by : Shri D. K. Parikh , AR Revenue by : Shri Satish Solanki , Sr. DR. ORDER PER P. M. JAGTAP , VICE - PRESIDENT : This appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the A.O. to consider these incomes for the purpose of computation of book profit , without appreciating that the A.O. had correctly worked out income from business / profession for computing book profit for determination of disallowance of partners remuneration in accordance with the provision of section 29 of the Act wherein the procedure for determination of profit gain of business referred to in section 28 of the Act by applying the various provisions contained in section 30 to 43D of the Act has been laid down . 2. The assessee, in the present case, is a partnership firm which is engaged in the business of exporting of processed spices and food stuff. The return of income for the year under consideration was filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al High Court on the same issue in a different case. Respectfully following the order of Gujarat HC and ITAT Ahmedabad, I direct the AO to delete the addition of Rs.1,52,34,661/- made by the AO by reducing the remuneration claimed to have been paid to the partners u/s 40(b) on the ground that interest income aggregating to Rs. 2,53,91,100/- (MGVCL Interest income Rs. 7,40,819/- and Bank interest Rs. 2,46,50,281/-) credited to Profit loss account and shown as business income is actually Income from other Sources and hence should be reduced from Book Profit for the purpose of computing allowable remuneration paid to the partners by the appellant firm as per section 40(b)(v) of the Act. Ground of appeal 1 to 4 are therefore allowed. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for A.Y. 2008-09, decided the matter in favour of the assessee relying upon the judgment passed by the Jurisdictional High Court with the following observations: 5. We find that the issue in appeal is now squarely covered by the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. J.J. Industries (358 ITR 531) wherein their Lordships have upheld the Tribunal's stand to the effect that for the purpose of ascertaining ceiling on the basis of book profit, the profit shall be in the profit and loss account. The interest income, therefore, cannot notionally be excluded for the purpose of determining the allowable deduction of remuneration paid to the partners under Section 40b of the Act. As in the present case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of authorization for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed; or (iv) any payment of interest to any partner which is authorized by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of [twelve] per cent simple interest per annum; or (v) any payment of remuneration to any partner who is a working partner, which is authorized by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermining the allowable deduction of remuneration paid to the partners under Section 40B of the Act 8. Counsel for the revenue vehemently contended that for the purpose of ascertaining the limit, only business income would be relevant and not any other income. In the present case, however, we need not enter into such controversy. The assessee had held out that it is in the business of purchasing raw cotton and ginning the same. It is a seasonal business. The interest income was generated out of spare funds invested in the fixed deposit Such income was declared as part of the business income and that is how even the Assessing Officer had accepted the same. That being the position, and the Assessing Officer in the assessment taxed such i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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