Adarsh Machinery And Tools Vs ITO (ITAT Ahmedabad)
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 20/11/2025 for Assessment Year 2015-16. The dispute concerned the disallowance of partners’ remuneration amounting to Rs. 6,41,548/-.
The assessee contended that while filing the Income Tax Return (ITR), the remuneration paid to partners of Rs. 6,41,548/- was correctly disclosed at Point No. 38 of Part A-P&L. The same amount was also certified in Clause 21(c) of Form 3CD by the tax auditor, which recorded remuneration debited to the Profit & Loss Account of Rs. 6,41,549/- and remuneration allowable under Section 40(b) of the Income Tax Act at Rs. 6,41,548/-. However, due to a data entry oversight, the column relating to remuneration paid/payable to partners in the “Partners’/Members’/Trust Information” schedule of the ITR was left blank. According to the assessee, this schedule was only informative, while the remuneration had already been disclosed in the Profit & Loss Account. The assessee also submitted that the remuneration had already been considered as income in the hands of the respective partners.
While processing the return under Section 143(1), the Centralized Processing Centre (CPC) noticed that Schedule E reflected remuneration paid to partners as “0” and consequently disallowed the claim of Rs. 6,41,548/-. The assessee stated that the intimation under Section 143(1) had been sent by email but escaped its attention. The assessee claimed to have first become aware of the disallowance only upon receiving a recovery notice in 2024, after which it immediately filed an application for rectification under Section 154 before the Assessing Officer.
