Case Law Details
ACIT Vs. M/s Sri Navodaya Granite Industries (ITAT Visakhapatnam)
However, we have gone through the partnership deed and in the partnership deed with regard to payment of remuneration,there was a clause for increase/decrease of remuneration as per mutual consent before the end of the financial year. In the instant case, there were only two partners. The P&L account and the financial statement were examined by both the partners and agreed for payment of remuneration of Rs. 5,30,000/. The partnership deed also limits the remuneration as permissible u/s 40(b) of I.T. Act. Since there are only two partners in the partnership firm, and the remuneration paid is permissible as per partnership deed and the books of accounts are being verified and certified by both the partners as stated by the Ld.AR, we are in agreement with the submission made by the Ld.AR that the payment of remuneration is in accordance with the partnership deed. The Ld.AR further submitted that the managing partner has admitted the income in his hands and paid taxes. Therefore, we hold that the remuneration of Rs. 5,30,000/- is authorized by the partnership deed which required to be allowed.
This view is supported by the decision of Hon’ble High Court of Rajasthan in the case of CIT Vs. Asian Marketing [254 CTR 0453]. Therefore, we set aside the order of the lower authorities and allow the remuneration paid to the partners.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
1. This appeal is filed by the revenue and the Cross Objection filed by the assessee against the order of the Commissioner of Income-Tax (Appeals) [CIT(A)]-2, Visakhapatnam vide ITA No. 186/2015-16/CIT(A)- 2/VSP/C-1,KKD/2016-17 dated 23.09.2016 for the A.Y. 2012-13.
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