Bharat Paper Mart Vs ACIT (ITAT Mumbai)
The appeal before the Income Tax Appellate Tribunal, Mumbai was filed by a partnership firm against an order passed by the National Faceless Appeal Centre (NFAC) dated 23 July 2025, which had upheld the assessment order issued by the Assistant Commissioner of Income Tax under Section 143(3) of the Income-tax Act, 1961 for Assessment Year 2013–14.
The assessee, a partnership firm engaged in the business of dealing in paper and boards, filed its return of income on 28 September 2013 declaring total income of ₹64,96,120. In its computation, the assessee claimed deduction towards remuneration paid to working partners amounting to ₹99,76,470. The remuneration was calculated on the basis of book profits under Section 40(b) of the Act.
During assessment proceedings, the Assessing Officer examined the partnership deeds submitted by the assessee. The partnership firm was initially constituted on 1 January 2009 and later executed another partnership deed on 4 March 2013 providing that 100% of remuneration would be payable to one of the partners. While reviewing the partnership deed, the Assessing Officer observed that the remuneration calculation limits mentioned in the deed referred to earlier thresholds under Section 40(b), which included 90% of the first ₹75,000 of book profit, 60% of the next ₹75,000, and 40% of the remaining profit.
