ACIT Vs Sri B. Sreeramulu (HUF) (ITAT Hyderabad)
Briefly stated, assessee-HUF is deriving income from house property and trading of jewellery etc. There were survey operations conducted on 02-02-2006 and scrutiny assessment U/s. 143(3) of the Act was computed on a total income of Rs. 37,96,220/-. In that assessment, AO has allowed remuneration of Rs. 13,00,290/- to the three members of the HUF for their services. On the reason that remuneration to co-parceners is not allowable U/s. 184 or U/s. 40(b) of the Act, proceedings were reopened U/s. 147 by issuance of notice U/s. 148 on 13-03-2013. In the re-assessment proceedings, inspite of objections from assessee, the remuneration paid to the three members were disallowed.
Before the Ld.CIT(A), it was the contention that the remuneration was paid to three persons, who are members of the HUF for their services rendered to the business and further, these aspects were examined in the course of survey and the assessment was completed after the survey proceedings were completed. It is also contended that the said remunerations are being allowed in earlier years also.
The remuneration to the members of the HUF were paid for the services rendered in the business which is allowable U/s. 37(1) and invoking the provisions of Section 184 and Section 40(b) does not arise on the facts of the case at all.
