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TMI Blog2004 (3) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. This remuneration was claimed under s. 40(b) of the IT Act and AO disallowed the same on the ground that as per Expln. 4 to s. 40(b), the remuneration paid to only an individual working partner is allowable and HUF partner cannot be treated as a working partner. 4. The assessee carried the matter in appeal and before the CIT(A), assessee-firm relied on articles of agreement executed on 2nd April, 1997, between the partners. Before the CIT(A) it was submitted that as per Expln. 4 in the new cl. (b) substituted in s. 40(b) by the Finance Act, 1992, w.e.f. 1st April, 1993, the expression "working partner" for the purpose of the said sub-cl. (b) has been defined to mean an individual who is actively engaged in conducting the affairs of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den Touch (2004) 186 CTR (Mad) 207 : (2003) 263 ITR 261 (Mad) wherein it has been held that even as the HUF cannot claim that remuneration paid to the partners representing it is remuneration paid to the HUF, so also the AO cannot regard the remuneration paid to such partner, who is also a working partner, as remuneration paid to the HUF for the purpose of disallowance under s. 40(b) of the IT Act, 1961. The learned Departmental Representative submitted that firstly there is no evidence of services rendered and secondly remuneration has been paid to HUF and not to the individual. Therefore, order of learned CIT(A) confirming the disallowance be upheld. 7. In rejoinder, counsel of the assessee submitted that as per decision of apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of learned CIT(A) on this issue and remit this issue to the file of AO with the direction that he should examine the evidence furnished and in case Karta of HUF namely, Shri Kundanlal Lalchand has rendered the services, AO is directed to allow the remuneration of Rs. 46,000 paid to him. Of course before adjudicating this issue afresh, AO will allow an opportunity of being heard to the assessee. 9. At the time of hearing, assessee raised the following additional grounds "1. The CIT(A) erred in upholding the disallowance of Rs. 10,601 made by the AO being 1/5th of the vehicle expenses and depreciation on vehicles. 2. The CIT(A) further erred in upholding the disallowance of Rs. 3,000 made by the AO for personal use of the tele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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