Shree Surgical Hospitals, Jalna V. Assistant Commissioner of Income-tax,

ITA 2009/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93743 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAZAR AKRAM
• Keywords: Unexplained cash credit; Business income; Depreciation; Source of fund
• Section: 143(3); 133A; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2009/PN/2013 (ASSESSMENT YEAR : 2000-10) SHREE SURGICAL HOSPITAL, NEAR DATTA MANDIR, GANDHI CHAMAN, OLD JALNA, JALNA PAN NO.ABAFS6468D .. APPELLANT VS. ACIT, CIRCLE-1, AURANGABAD .. RESPONDENT ASSESSEE BY : SMT. DEEPA KHARE REVENUE BY : SHRI MAZAR AKRAM DATE OF HEARING : 12-05-2015 DATE OF PRONOUNCEMENT : 27-05-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 10-10-2013 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.10,04,000/- TOWARDS REMUNERATION TO PARTNERS U/S .40(B) OF THE I.T. ACT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE PROFESSION OF MEDIC AL PRACTICE. A 2 SURVEY ACTION U/S.133A OF THE ACT WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 26-03-2009. DURING THE COURSE OF SURVE Y ACTION, THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.25,10,000 /- OVER AND ABOVE ITS REGULAR INCOME ON ACCOUNT OF UNACCOUNTED ADVANCES FOUND RECORDED IN DIARY AMOUNTING TO RS.17,10,000/- AND EXCESS CASH FOUND IN SURVEY ACTION AMOUNTING TO RS.8,00,00 0/-. THE ASSESSEE CLAIMED REMUNERATION U/S.40(B) IN RESPECT OF INCOME OFFERED DURING SURVEY ACTION. THE AO TAXED THE SAI D ADDITIONAL INCOME U/S.68 OF THE I.T. ACT AND HELD THAT SALARY TO PARTNERS IS NOT AN ALLOWABLE EXPENDITURE IN RESPECT OF INCOME TAXED U/S.68 OF THE ACT AND ACCORDINGLY DISALLOWED THE REMUNERATION TO PARTNERS RELATABLE TO INCOME OFFERED DURING SURVEY ACTION AN D ASSESSED THE INCOME OF THE ASSESSEE AT RS.39,49,000/- BY MAKING DISALLOWANCE OF RS.10,04,000/-. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT NO EVI DENCE WAS FOUND AT THE TIME OF SURVEY ACTION U/S 133A WHICH P ROVED THAT THE SAID ADDITIONAL INCOME OFFERED TO TAX OF RS.25,10,0 00/- WAS NOT A PROFESSIONAL INCOME BUT INCOME FROM SOME OTHER SOUR CES. AS PER THE STATEMENT RECORDED DURING SURVEY ACTION, THE SAID I NCOME WAS OFFERED TO TAX OVER AND ABOVE REGULAR INCOME TO AVO ID PROTRACTED LITIGATION AND TO BUY PEACE OF MIND. THE PARTNERS OF THE FIRM HAVE OFFERED TO TAX THE REMUNERATION SOCLAIMED IN RESP ECT OF THE SAID INCOME OF RS.25,10,000/- AND HAVE PAID TAXES ACCORD INGLY. THE A.O. HAS ALSO ASSESSED INCOME OF ONE OF THE PARTNER S DR.RAJAN B. SHINDE U/S 143(3) OF THE ACT DATED 30/09/2011 WHICH INCLUDES 3 REMUNERATION FROM THE ASSESSEE FIRM. THE PARTNERSH IP DEED AUTHORIZES TO WORK OUT REMUNERATION AS PER THE PROV ISIONS OF SECTION 40(B)(V) OF THE ACT. IT WAS ARGUED THAT THE AO FA ILED TO APPRECIATE THE FACT THAT THE ONLY SOURCES OF INCOME OF THE FIRM IS FROM MEDICAL PROFESSION AND NOT AN IOTA OF EVIDENCE WAS EVER FOU ND DURING SURVEY ACTION U/S 133A WHICH COULD PROVE THAT THE INCOME W AS NOT FROM PROFESSION BUT FROM OTHER SOURCE. THE ASSESSEE PRE PARED COMPUTATION OF INCOME WHEREIN NET LOSS AS PER PROFI T & LOSS ACCOUNT HAS BEEN CONSIDERED AND FOR CALCULATING BUSINESS IN COME & REMUNERATION, THE INCOME OFFERED TO TAX IN SURVEY A CTION AMOUNTING TO RS.25,10,000/- HAS BEEN ADDED AND ACCORDINGLY TH E BUSINESS INCOME HAS BEEN ARRIVED AT AND ACCORDINGLY THE REMU NERATION TO PARTNERS HAS BEEN WORKED OUT AS PER PROVISIONS OF S ECTION 40(B)(V) OF THE ACT. 5. HOWEVER, THE CIT(A) WAS NOT CONVINCED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE DISALLOWANC E MADE BY THE AO BY OBSERVING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICE D THAT THE APPELLANT FIRM IS ENGAGED IN THE PROFESSION OF MEDICAL PRACTICE AND DURING THE COURSE OF SURVEY ACTION, ON THE BASIS OF DIA RY FOUND, THE APPELLANT HAS DECLARED ADDITIONAL INCOME OF RS.17,10 ,000/- AND ON ACCOUNT OF CASH FOUND, THE APPELLANT HAS DECLARED ADD ITIONAL INCOME OF RS.8,00,000/-. THE APPELLANT HAS CLAIMED THAT THE FIRM HAS NO OTHER SOURCE OF INCOME AND NO EVIDENCE HAS BEEN FOUND IN SURVEY ACTION OR DURING THE ASSESSMENT PROCEEDINGS TO SHOW THAT THE INCOME OFFERED TO TAX HAS NOT BEEN EARNED BY THE APP ELLANT FROM ITS MEDICAL PROFESSION BUT FROM SOME OTHER SOURCE OF INCOME . THE APPELLANT, THEREFORE, CLAIMED THAT THE INCOME OFFER ED TO TAX IN SURVEY ACTION IS INCOME FROM PROFESSION ONLY. THE AR OF THE APPELLANT HAS, THEREFORE, CLAIMED THAT NO DISALLOWAN CE IS JUSTIFIED IN VIEW OF EXPLANATION-3 TO SECTION 40(B) OF THE ACT. O N THE OTHER HAND, THE A.O. HAS MADE ADDITION U/S 68 AS UNEXPLAINED CASH CREDIT. 4 6.1 IN ORDER TO DECIDE THE ISSUE UNDER APPEAL ABOUT A LLOWABILITY OF REMUNERATION TO PARTNERS IN RESPECT OF INCOME OFFE RED TO TAX DURING SURVEY ACTION U/S 133A, THE PROVISIONS OF SECTION 40(B)(V) AND EXPLANATION-3 ARE RELEVANT AND HENCE THE RELEVA NT PORTION OF THE SAME IS REPRODUCED BELOW '40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SEC TIONS 30 TO 6- [38], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS O F BUSINESS OR PROFESSION', . . . [(B) IN THE CASE OF ANY FIRM ASSESSABLE AS SUCH, . . . (V) ANY PAYMENT OF REMUNERATION TO ANY PARTNER WHO IS A WORKING PARTNER, WHICH IS AUTHORISED BY, AND IS IN ACCORDANCE WITH, THE TERMS OF THE PARTNERSHIP DEED AND RELATES TO ANY PERIO D FALLING AFTER THE DATE OF SUCH PARTNERSHIP DEED IN SO FAR AS THE AMOU NT OF SUCH PAYMENT TO ALL THE PARTNERS DURING THE PREVIOUS YEAR EXCEEDS THE AGGREGATE AMOUNT COMPUTED AS HEREUNDER : . .. EXPLANATION 3.FOR THE PURPOSES OF THIS CLAUSE, 'BOOK- PROFIT' MEANS THE NET PROFIT, AS SHOWN IN THE PROFIT AND LOSS A CCOUNT FOR THE RELEVANT PREVIOUS YEAR, COMPUTED IN THE MANNER LAID DOWN IN CHAPTER IV-D AS INCREASED BY THE AGGREGATE AMOUNT OF THE REMUNERATION PAID OR PAYABLE TO ALL THE PARTNERS OF THE FIRM IF SUCH AMOUNT HAS BEEN DEDUCTED WHILE COMPUTING THE NET PRO FIT. 6.2 FROM THE ABOVE PROVISION OF SECTION 40(B)(V) AN D EXPLANATION-3 TO THE SAID SECTION, IT IS EVIDENT TH AT BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE PROFIT & LOSS ACCOUN T. FROM THE AUDITED INCOME & EXPENDITURE ACCOUNT (PROFIT & LOSS ACCOUNT) AND STATEMENT OF COMPUTATION OF INCOME FILED BY THE APPE LLANT, IT HAS BEEN NOTICED THAT THE APPELLANT HAS NOT CREDITED THE INCOME OFFERED TO TAX AMOUNTING TO RS.25,10,000/- IN THE AUDITED P ROFIT & LOSS ACCOUNT. THE APPELLANT HAS CONSIDERED THE SAME IN C OMPUTATION OF INCOME. THEREFORE, IT IS EVIDENT THAT THE APPELLANT HAS NOT CONSIDERED THE SAID INCOME IN THE BOOKS ACCOUNTS AS PROFESSION AL INCOME AND HAS NOT CREDITED THE SAME TO THE PROFIT AND LOSS ACC OUNT. THEREFORE, IN VIEW OF THE ABOVE PROVISION, THE ALLOWABLE REMUNERATION U/S 40(B)(V) READ WITH EXPLANATION-3 IS TO BE WORKED OUT B Y CONSIDERING PROFIT AS PER PROFIT & LOSS ACCOUNT. THE DE CISIONS RELIED ON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS AS IN THE CASE UNDER APPEAL, THE APPELLANT HAS NOT CREDITED THE SAID ADDITIONAL INCOME OF RS.25,10,000/- OFFERED TO TAX DURING SURVEY ACTION AS HIS INCOME FROM PROFESSION AND HAS NOT CREDITED THE SAME IN THE AUDITED PROFIT & LOSS ACCOUNT. FURTHER, RECENTLY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF M.D. SERAJUDDIN & BROS. VS. CIT (2012) 210 TAXMAN 84, 80 DTR 46 (CAL. HC) HAS HELD AS UNDER 5 'THE SAID CHAPTER NOWHERE PROVIDES THAT METHOD OF ACC OUNTING FOR THE PURPOSE OF ASCERTAINING NET PROFIT SHOULD BE THE O NLY INCOME FROM BUSINESS ALONE AND NOT FROM OTHER SOURCES. SECT ION-29 PROVIDES HOW THE INCOME FROM PROFIT AND GAINS OF BUSINES S OR PROFESSION SHOULD BE COMPUTED AND THIS HAS TO BE DONE AS PROVIDED U/S 30 TO 4 3D. BY VIRTUE OF SECTION-5 OF THE SAID ACT THAT THE TOTAL INCOME OF THE ANY PREVIOUS YEAR INCLUDES ALL INCOME FR OM WHATEVER SOURCE DERIVED. THUS, FOR THE PURPOSE OF 40(B)(V) RE AD WITH EXPLANATION THERE CANNOT BE SEPARATE METHOD OF ACCO UNTING FOR ASCERTAINING NET PROFIT AND/OR BOOK PROFIT. THE SAID SEC TION NOWHERE PROVIDES, AS RIGHTLY POINTED OUT BY MR.KHAITAN, THE LD. SENIOR ADVOCATE THAT THE NET PROFIT AS SHOWN IN THE PR OFIT & LOSS ACCOUNT, NOT THE PROFIT COMPUTED UNDER THE HEAD PROF ITS & GAINS OF BUSINESS OR PROFESSION. THE HON'BLE COURT HAS ACCORDIN GLY LAID DOWN THAT FOR THE PURPOSE OF COMPUTATION OF ALLOWABL E REMUNERATION TO PARTNERS, BOOK PROFIT HAS TO BE ASCER TAINED NOT ONLY FROM INCOME OF BUSINESS ALONE BUT ALSO FROM INCOM E FROM OTHER SOURCES. IN CALCULATION OF ALLOWABLE REMUNERAT ION, PROFIT MEANS PROFIT AS PER PROFIT & LOSS ACCOUNT.' THE ABOVE RECENT DECISION OF HON'BLE CALCUTTA HIGH CO URT ALSO LAYS DOWN THAT FOR THE PURPOSE OF COMPUTATION OF ALLOWABL E REMUNERATION TO PARTNERS, NET PROFIT AS PER PROFIT & L OSS ACCOUNT IS TO BE CONSIDERED. 6.3 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESP ECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABOVE REFERRED DE CISIONS, I AM OF THE CONSIDERED OPINION THAT THE A.O. IS JUSTIFIED IN DIS ALLOWING THE REMUNERATION TO PARTNERS AMOUNTING TO RS.10,04,000/-. THE DISALLOWANCE OF RS.10,04,000/- IS, THEREFORE, CONFIRME D. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A). REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. PROTOVIT FOOD PROD UCTS VS. ITO VIDE ITA NO.826/PN/2008 ORDER DATED 29-08-2008 SHE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TR IBUNAL FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ITO VS. M/S. MANNALAL PANNALAL SETHIA VIDE ITA NO.883/PN/2006 FO R A.Y. 2003-04 ORDER DATED 30-05-2008 HAS ALLOWED THE CLAI M OF SALARY OR 6 REMUNERATION PAID TO PARTNERS U/S.40(B) OF THE ACT IN RESPECT OF THE INCOME DECLARED DURING THE COURSE OF SURVEY. 8. REFERRING TO THE DECISION OF THE COORDINATE BENC H OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. METRO WINE SHO P VIDE ITA NO.902/PN/2006 ORDER DATED 22-11-2007 FOR A.Y. 2003 -04 SHE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION FO LLOWING ANOTHER DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PRAKASH VASTU BANDAR VIDE ITA NO.602/PN/2004 ORDER DATED 13- 04-2006 FOR A.Y. 2000-01 HAS ALLOWED THE CLAIM OF D EDUCTION U/S.40(B) ON THE ADDITIONAL INCOME DISCLOSED DURING THE COURSE OF SURVEY U/S.133A. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF LAXMI VIJAY SAW MILL & TIMBER VS. ITO VIDE ITA NO.1925/PN/2014 ORDER DATED 27-11-2014 SHE SUBMITTED THAT IN THE SAID DECISION THE TRIBUNAL FO LLOWING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF MOHD. SERAJUDDIN & BROTHERS VS. CIT REPORTED IN 210 TAXMA NN 84 HAS HELD THAT ASSESSEE IS ENTITLED TO COMPUTE REMUNERAT ION TO PARTNERS U/S.40(B) ON INCOME ON ACCOUNT OF EXCESS STOCK WHIC H WAS DECLARED DURING THE COURSE OF SURVEY AND WHICH WAS TREATED B Y THE ASSESSEE AS BUSINESS INCOME. SHE ACCORDINGLY SUBMITTED THAT IN VIEW OF THE ABOVE DECISIONS THE ORDER OF THE CIT(A) SHOULD BE R EVERSED AND THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 9. SO FAR AS THE DECISION OF THE HONBLE CALCUTTA H IGH COURT IN THE CASE OF MD. SERAJUDDIN & BROTHERS VS. CIT REPOR TED IN 210 TAXMANN 84 RELIED ON BY THE LD.CIT(A) IS CONCERNED SHE SUBMITTED 7 THAT THE SAID DECISION IS NOT APPLICABLE TO THE FAC TS OF THE PRESENT CASE. SINCE THE COORDINATE BENCHES OF THE TRIBUNAL HAVE TAKEN A CONSISTENT VIEW WHICH IS IN FAVOUR OF THE ASSESSEE, THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBM ITTED THAT THE ASSESSEE HAS NOT CREDITED THE ADDITIONAL INCOME DEC LARED DURING THE COURSE OF SURVEY TO THE PROFIT AND LOSS ACCOUNT FOR CALCULATING THE BOOK PROFIT. HE SUBMITTED THAT THE LD.CIT(A) FOLLO WING THE DECISION OF THE HONBLE CALCUTTA HIGH COURT HAS DEC IDED THE ISSUE AGAINST THE ASSESSEE. THEREFORE, THE HIGH COURT DE CISION BEING SUPERIOR TO THE DECISION OF THE TRIBUNAL, THE ORDER OF LD.CIT(A) BE UPHELD AND THE GROUND RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. T HE ONLY DISPUTE TO BE ADJUDICATED IN THIS APPEAL IS REGARDING THE A LLOWABILITY OF REMUNERATION TO PARTNERS U/S.40(B) OF THE I.T. ACT ON THE ADDITIONAL INCOME OF RS.25,10,000/- DECLARED BY THE ASSESSEE D URING THE COURSE OF SURVEY. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE FIRM HAS NO OTHER SOURCE OF INCOME AND NO EVIDENCE HAS BEEN FOUND IN SURVEY ACTION OR DURING ASSESSMENT PR OCEEDINGS TO SHOW THAT THE INCOME OFFERED TO TAX HAS NOT BEEN EA RNED BY THE 8 ASSESSEE FROM ITS MEDICAL PROFESSION BUT FROM SOME OTHER SOURCE OF INCOME. ACCORDING TO THE LD. COUNSEL FOR THE ASSES SEE IN VIEW OF THE VARIOUS DECISIONS OF THE COORDINATE BENCHES OF THE TRIBUNAL THE ASSESSEE IS ENTITLED TO REMUNERATION U/S.40(B) ON T HE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY. IT IS THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT SINCE T HE ASSESSEE HAS NOT CREDITED THE INCOME IN THE PROFIT AND LOSS ACCO UNT OR INCOME AND EXPENDITURE ACCOUNT BUT HAS DECLARED THE SAME ONLY IN THE STATEMENT OF COMPUTATION OF INCOME, THEREFORE, THE ASSESSEE I S NOT ENTITLED TO REMUNERATION U/S.40(B) ON THE ADDITIONAL INCOME DEC LARED DURING THE COURSE OF SURVEY. 12. FROM THE AUDITED PROFIT AND LOSS ACCOUNT AND BA LANCE SHEET FILED IN THE PAPER BOOK AT PAGES 31 TO 35 WE FIND T HE ASSESSEE HAS NOT CREDITED SUCH ADDITIONAL INCOME TO THE PROFIT A ND LOSS ACCOUNT OR INCOME AND EXPENDITURE ACCOUNT. THE ASSESSEE HAS O NLY OFFERED THE SAME TO TAX IN THE COMPUTATION OF INCOME FOR A.Y. 2 009-10, THE DETAILS OF WHICH ARE AS UNDER : M/S. SRI SURGICAL HOSPITAL, JALNA PAN NO. ABAFS64688D COMPUTATION OF INCOME FOR 2009-10 ASST. RS. RS. RS. 1. NET INCOME AS PER INCOME (684,433) AND EXPENDITURE ACCOUNT ADD INCOME TAX 1,080,905 INTEREST TO PARTNERS 266,216 SALARIES TO PARTNERS 2,080,000 FRINGE BENEFIT TAX 15,000 1/3 RD OF CAR DEPRECIATION 18,182 OUT OF MIS EXPENSES 5,346 9 INCOME DECLARED AT THE TIME OF ACTION U/S.133A CREDITED TO THE CAPITAL ACCOUNT OF THE PARTNERS : EXCESS CASH FOUND 800,000 ADVANCES NOT RECORDED IN BOOK 1,710,000 -------------- 5,975,649 -------------- 5,291,216 LESS INTEREST TO PARTNERS 266,216 -------------- 5,025,000 LESS : SALARIES TO PARTNERS 2,080,000 -------------- 2,945,000 ------------- TAXABLE INCOME 2,945,000 LESS : LOSSES B/FD 0 ------------- 2,945,000 TAX 883,500 SURCHARGE @10% 0 EDUCATION CESS @3% 26,505 ----------- 910,005 ------------- DIVISIONAL INCOME 2,034,995 -------------- 13. FROM THE ABOVE IT IS CLEAR THAT THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY IS NOT A PART OF THE BO OK PROFIT BUT ONLY IS A PART OF THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME. 13.1 DEFINITION OF BOOK PROFIT IS GIVEN IN EXPLANAT ION 3 TO SECTION 40 WHICH HAS ALREADY BEEN REPRODUCED EARLIER AT PAR A 5 OF THE IMPUGNED ORDER. SINCE THE ASSESSEE HAS NOT CREDITE D THE ADDITIONAL INCOME TO THE PROFIT AND LOSS ACCOUNT, THEREFORE, T HE ASSESSEE IN OUR OPINION CANNOT CLAIM REMUNERATION TO PARTNERS FROM SUCH ADDITIONAL INCOME FOR THE PURPOSE OF SECTION 40(B). THE HONB LE CALCUTTA HIGH COURT IN THE CASE OF M.D. SERAJUDDIN AND BROTH ERS (SUPRA) HAS 10 HELD THAT IN CALCULATION OF ALLOWABLE REMUNERATION, PROFIT MEANS PROFIT AS PER PROFIT AND LOSS ACCOUNT. 13.2 THE VARIOUS DECISIONS RELIED ON BY THE LD. COU NSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. IN THE CASE OF METRO WINE SHOP, DURING THE COURSE OF SURVE Y ACTION U/S.133A CASH OF RS.6,75,280/- WAS FOUND AS AGAINST THE CASH BALANCE IN THE BOOKS OF ACCOUNT AT RS.75,218/-. THE DIFFERENCE OF RS.6 LAKHS WAS DECLARED AS ADDITIONAL INCOME BY CRE DITING THE SAME IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE CONSI DERED THE AMOUNT OF RS.6 LAKHS FOR THE PURPOSE OF COMPUTATION OF REM UNERATION TO PARTNERS U/S.40(B). WHEN THE AO DISALLOWED THE CLA IM OF DEDUCTION U/S.40(B) ON THE BOOK PROFIT WHICH INCLUDED THE ABO VE AMOUNT OF RS.6 LAKHS THE CIT(A) ALLOWED THE CLAIM AND ON FURT HER APPEAL BY THE REVENUE THE TRIBUNAL ALLOWED THE CLAIM OF THE A SSESSEE. HOWEVER, IN THE INSTANT CASE SINCE THE ASSESSEE HAS NOT CREDITED SUCH ADDITIONAL INCOME TO THE PROFIT AND LOSS ACCOUNT AN D THE BOOK PROFIT OF THE ASSESSEE DOES NOT INCLUDE THE ADDITIONAL INC OME DECLARED DURING THE COURSE OF SURVEY AMOUNTING TO RS.25,10,0 00/-, THEREFORE, THE ABOVE DECISION IS NOT APPLICABLE. 14. EVEN IN THE CASE OF LAXMI VIJAY SAW MILL & TIMB ER (SUPRA) THERE IS A CATEGORICAL FINDING BY THE TRIBUNAL THAT THE ASSESSEE HAS CREDITED SUCH INCOME ON ACCOUNT OF EXCESS STOCK TO THE PROFIT AND LOSS ACCOUNT FOR DETERMINATION OF BOOK PROFIT FOR C ALCULATING THE REMUNERATION TO PARTNERS. FURTHER, THE AO IN THE A SSESSMENT ORDER HAS ALSO CONSIDERED SUCH INCOME AS BUSINESS INCOME AND NO 11 ADDITION HAS BEEN MADE U/S.69, 69A, 69B OR 69C. HO WEVER, IN THE INSTANT CASE AS POINTED OUT EARLIER THE ASSESSEE HA S NOT CREDITED THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SUR VEY TO THE PROFIT AND LOSS ACCOUNT. FURTHER, THE AO IN THE ASSESSMEN T ORDER HAS MADE ADDITION OF RS.25,10,000/- DECLARED DURING THE COUR SE OF SURVEY AS INCOME FROM UNDISCLOSED SOURCE U/S.68. THEREFORE, THE SAID DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CASE OF PROTOVIT FOOD PRODUCTS (SUPRA) IS CONCERNED THE SAID DECISION IS PRIOR TO THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF M.D. SERAJUDDIN & BROTHERS (SUPRA). 15. IN VIEW OF THE ABOVE, THE VARIOUS DECISIONS REL IED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. SINCE THE ASSESSEE HAS NOT CREDITED THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY TO THE PROFIT AND LOSS ACCOUNT FOR DETERMINING THE BOOK PROFIT FOR CALCULA TION OF ALLOWABLE SALARY TO PARTNERS U/S.40(B) OF THE I.T. ACT, THERE FORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE DISALLOWANCE OF REMUNERATION TO PARTNERS U/S.40(B) OF THE I.T. A CT. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY DISMISSED. 16. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27-05-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 27 TH MAY, 2015 SATISH 12 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A), AURANGABAD 4. THE CIT, AURANGABAD 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASST. REGISTRAR ITAT, PUNE BENCHES, PUNE