Case Law Details
Panda Fuels Vs ITO (ITAT Cuttack)
We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case the Assessing Officer disallowed deduction for remuneration paid to partners of Rs.6,64,923/- on the ground that the partnership deed does not provide for remuneration to partners. The same was confirmed in appeal by the CIT(A) on the ground that the remuneration to individual partners has neither fixed in the deed nor the deed provides for the manner of quantification of such remuneration.
As per the provisions of Income tax At, the partnership deed should provide for payment of remuneration to working partners. It does not provide that the remuneration paid to working partners should be fixed by the partnership deed or that the partnership deed should provide for the method of remuneration to the working partners.
As partnership deed provides for payment of remuneration to partners which would be as per the provisions of the Act, which meant that the remuneration payable to partners would be quantified as per the provisions of the Act and shall not exceed the maximum remuneration provided. It is not in dispute that the partners were paid remuneration, which was less than the maximum provided by the Act. None of the authorities have disputed the payment of remuneration and has accepted the books of account of the assessee as correct and, therefore, the remuneration was deductible while computing the income of the assessee firm. We, therefore, set aside the orders of lower authorities and delete the disallowance of Rs.6,64,923/- and allow this ground of appeal of the assessee.
FULL TEXT OF THE ITAT JUDGMENT
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