AO To Decide If Deloitte Haskins Is a Valid Partnership Firm

2. Facts apropos are that assessee, a firm of Chartered Accountants, filed its return for impugned assessment year on 30^th September, 2008, declaring a total income of ~ 17,70,69,972/-. The assessment was completed on 31^st December, 2010 under Section 143(3) of the Act, accepting the income returned. Thereafter, on 29.2.2012, CIT issued a show cause notice under Section 263 of the Act, inter alia, stating that the number of partners in the firm had gone above 20, during the relevant previous year. As per ld. CIT, there were some amendments in the partnership deed on 1^st May, 2007, whereby one Shri Mukund Dharmadhikari, already a partner of the firm, was added once again as partner in a representative capacity, representing M/s Deloitte Haskins & Sells, Mumbai. Ld. CIT noted that Shri Mukund Dharmadhikari had right to share of profit, both in the representative capacity as well as in his individual capacity. Thus, according to him, the number of partners exceeded 20, maximum allowed under Indian Partnership Act, 1932. Assessee therefore had to be treated as an Association of Persons. Assessment order under Section 143(3), passed on 31 .12.201 0, as per CIT, did not consider this aspect, but had accepted the claim of the assessee that it was a firm and on account of this, assessee was allowed deduction under Section 40(b) of the Act on salaries paid to its partners.