U.N. Corporation Vs DCIT (ITAT Ahmedabad)
Assessee had changed the terms of payment of remuneration to its partners as agreed to in the original partnership deed. While the original terms agreed to, required remuneration to be paid to the extent allowable u/s.40(b) @ 25% each to all the four partners of the assessee firm, assessee paid remuneration only to two partners, with one of the partner getting 75% share & the other getting 25% share. Partnership deed contained clause stating that any change in terms of payment of remuneration to partners was to be provided for by way of supplementary deed. Assessee submitted a supplementary deed in support of its claim of remuneration paid only to two partners during the year, but, the same was found to be not notarized. When the same was pointed out to the assessee, he filed another copy of the same supplementary deed duly notarized. AO rejected both supplementary deeds stating that the first one not being notarized could not be treated as genuine while the second one was found to be notarized by back date & therefore, was also rejected as being not genuine. The case of the AO also was that the assessee was resorting to the practice of changing the amount of remuneration paid to all the four partners who allegedly were all related so as to minimize the amount of tax paid in all by them. That the change in remuneration & interest paid to partners year-to-year was a tax planning scheme of the assessee in the impugned year, since it was found to be not supported by a genuine supplementary deed. AO accordingly disallowed the excess 50% remuneration paid to one partner, amounting to Rs.80,00,000/-. CIT(A) upheld the order of AO.
