Mahalaxmi Jewellers Vs ITO (ITAT Panaji)
Panaji ITAT: Same Partner Remuneration Cannot Be Taxed Twice – ₹2.98 Lakh Addition in Firm Deleted Where Amount Already Taxed in Partner’s Hands
The Panaji ITAT in M/s Mahalaxmi Jewellers v. ITO dealt with an important case of double taxation of partner remuneration for AY 2013-14.
The assessee partnership firm had not filed its return of income. During a survey at the premises of another concern, it was found that Mahalaxmi Jewellers was also operating from the same address. Its profit & loss account reflected net profit of ₹1.85 lakh after claiming ₹4.96 lakh as remuneration to partners. Since no return had been filed, the AO disallowed the entire partner remuneration and assessed income at ₹6.81 lakh, comprising ₹1.85 lakh of net profit and ₹4.96 lakh of disallowed remuneration.
Before the Tribunal, the assessee pointed out that out of the ₹4.96 lakh remuneration, ₹2,97,626 paid to partner Shri Dattaram Sitaram Anvekar had already been separately assessed and taxed in the partner’s own reassessment proceedings u/s 147. The partner had accepted that assessment and had not filed any appeal. The assessee produced the partner’s assessment order before the ITAT to establish this fact.
The ITAT held that sustaining the disallowance of the same ₹2,97,626 in the firm’s hands, when the identical remuneration had already been taxed in the partner’s hands for the same assessment year, would amount to double taxation. It therefore set aside the CIT(A)’s order to this extent and directed the AO to delete ₹2,97,626 from the firm’s assessment.
FULL TEXT OF THE ORDER OF ITAT PANAJI
This appeal filed by the assessee is directed against the order dated 28.10.2025 passed by Ld. CIT(A)-2, Panaji [‘Ld. CIT(A)’] for the assessment year 2013-14.
