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TMI Blog2023 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... certain limits of book profit . The explanation 3 defines the term book profit, means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit. The present issue is squarely covered by the judgement of CIT Vs J J Industries [ 2013 (7) TMI 577 - GUJARAT HIGH COURT] and Md. Serajuddin Bros. [ 2012 (8) TMI 104 - CALCUTTA HIGH COURT] any interest earned from the funds deployed which arose out business activity by no stretch of imagination can it be categorized under the head income from oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber And Shri G. D. Padmahshali, Accountant Member For the Assessee : Shri Rahul Sarda For the Revenue : Shri N. Shrikanth ORDER PER G. D. PADMAHSHALI, AM; Present appeal is instituted u/s 253(1) of the Act against order of Principal Commissioner of Income Tax, Panaji [ CIT(A) in short] dt. 29/03/2019 passed u/s 263 of the Income-tax Act, 1961 [ the Act in short] which in turn ascended out of assessment order dt. 30/11/2016 passed u/s 143(3) of the Act by the Income Tax Officer, Ward-5, Margao-Goa [ AO in short]. 2. Pithily stated facts borne out of case records are; 2.1 The assessee is a partnership firm engaged in the business as real estate developers civil contractors etc., had e-filed its return decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to its working partner exceeding certain limits of book profit . The explanation 3 defines the term book profit, means the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D as increased by the aggregate amount of the remuneration paid or payable to all the partners of the firm if such amount has been deducted while computing the net profit. 5. We find that the present issue is squarely covered by the judgement of Hon ble Gujarat High Court in the case of CIT Vs J J Industries reported in 358 ITR 531 wherein their Lordships have held that; The said chapter nowhere provides that method of accounting for the purpose of ascertaining net profit sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court CIT vs. Lok Holdings reported in 308 ITR 356 [equivalent citation 189 taxman 452], has categorically held that interest earned from deposit of funds linked to any business activity is income from business profession and thus, cannot be categorized as income arising from other sources. 7. It is a settled principle of law now that, income for the purpose of ascertaining ceiling on the basis of book profit, the profit shall be as appearing in the profit and loss account. The interest income, thus, cannot notionally be excluded while determining allowable of deduction of remuneration to partners u/s 40(b)(v) of the Act. In the extent case, the interest income shall form part of business income for the purpose of computing admissib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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