9911796707
TMI Blog2009 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, the partners may decide to invest certain amounts of the profits into other venture and receive less remuneration than that which is permissible under the partnership deed, but there is nothing which debars them from claiming the maximum amount of remuneration payable in terms of the partnership deed. The method of remuneration having been laid down, the assessee firm is entitled to deduct the remuneration paid to the partners under Section 40(b)(v) of the Income Tax Act X X X X Extracts X X X X X X X X Extracts X X X X ..... such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder:- (1) in case of a firm carrying on a profession referred to in section 44AA or which is notified for the purpose of that section - (a) on the first Rs.1,00,000 of the book-profit or in case of a loss Rs.50,000 or at the rate of 90 per cent of the book-profit, whichever is more; (b) on the next Rs.1,00,000 of the book-profit at the rate of 60 per cent; (c) on the balance of the book-Profit at the rate of 40 per cent; This provision of law was the subject matter of a number of conflicting decisions and, therefore, Central Board of Direct Taxes (CBDT) issued circular No.739, dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That individual share in the profits or losses of the partnership business shall be equal and the total yearly remuneration payable to the partners shall be calculated as under:- The yearly remuneration payable to the partners shall be calculated the percentage of the book profits for each accounting year prescribed in the following manner:- In respect of book profits up to Rs.75000 Upto Rs.50000 or 90% of the book profits whichever is more. In respect of the next Rs.75000 60% In respect of the balance book profits 40% For the purpose of above calculations of the book profits, the same shall be computed as defined in Section 40(b) of the Income-tax Act, 1961 or any other the provision of law as may be applicable for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een clarified that in case there is any loss in a particular year, the partners shall not be entitled to any remuneration whereas the Section in question allows the remuneration even in case of losses. Clause 7 lays down that the remuneration payable to the partners shall be credited to their respective accounts at the close of the accounting year. The opening portion of Clause 5 lays down that the partners shall be entitled to equal remuneration. Therefore, it is apparent that in case of two partners, each of them would get 50% total remuneration payable under the partnership deed. It is contended on behalf of the revenue that in respect of the profits upto Rs.75,000/-, even in the partnership deed, the word "upto Rs.50,000/- or 90% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial discipline requires that once a decision is taken then the judicial or the quasi judicial authority should follow the said decision unless reasons are given in writing to take a different view. Every judicial authority has the right to correct itself but it is in the fitness of things that it should make a reference to its earlier orders and give reasons for the change in views. However, in the present case, we find that the facts of the present case were very different. In the earlier case of M/s Mela Ram Mitter Bhushan decided by the ITAT, it had been proved by the revenue that though as per the partnership deed, each partner was entitled to receive remuneration of Rs.42,640/-, but as per the books of account, the assessee firm ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
