Case Law Details
Ms. Sachi Sarees Vs ACIT (ITAT Kolkata)
There is no law which prohibits a person to work in more than one partnership firms and draw remuneration therefrom. All that Section 40(b) requires is that the remuneration should be paid to a working partner and there is no prohibition either in the Income-tax Act, 1961 or the Indian Partnership Act, 1932 debarring a partner to draw remuneration from more than one partnership firms. In the circumstances, I do not find any reason to uphold the disallowance merely because two working partners of the assessee firm were also working partners of another firm namely M/s Lal Fashion and in that capacity derived remuneration from two firms.
FULL TEXT OF THE ITAT JUDGMENT
This appeal has been preferred by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals)-13, Kolkata [‘Ld. CIT(A)] dated 18.12.2017 the Assessment Year 2012-13.
2. Briefly stated the facts of the case that the appellant is a partnership firm engaged in the business of dealing in sarees and salwar suits. In the assessment completed u/s 143(3), the AO had disallowed the advertisement charges of Rs.10,20,144/- on the ground of non-deduction of tax u/s 40(a)(ia) of the Act. The AO had further disallowed the remuneration/ commission to the extent of Rs.2,65,884/- paid to two partners out of four partners on the ground of not being reasonable. The appellant preferred an appeal before the Ld. CIT(A) who confirmed both the disallowances made by the AO. Aggrieved, the appellant is now in appeal before us.
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