The Deputy Commissioner of Income tax, Hoshiarpur V. M/s. Chawla Furnishers, Hoshiarpur

ITA 273/ASR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68259 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Business income; Income from undisclosed sources; Onus to prove
• Section: 143(3); 133A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.273(ASR)/2013 ASSESSMENT YEAR:2007-08 PAN :AACFC4288N DY. COMMR. OF INCOME TAX, VS. M/S. CHAWLA FURNISHE RS, HOSHIARPUR CIRCLE, FATEHGARH ROAD, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:SH.J.S.BHASIN, ADVOCATE DATE OF HEARING:05/12/2013 DATE OF PRONOUNCEMENT:13.12.2013 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A), JALANDHAR, DATED 01.01.2013 FOR THE ASSESSMENT YEA R 2007-08. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT, WHETHER ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF R S.12,15,067/- ON ACCOUNT OF DISALLOWANCE OF SALARY TO PARTNERS U/S 40(B) OF THE INCOME- TAX ACT, BY TREATING THE SURRENDERED CASH OF RS.30 ,50,000/- DURING THE ITA NO.273(ASR)/2013 2 COURSE OF SURVEY U/S 133A OF THE ACT, AS THE BUSIN ESS INCOME OF THE ASSESSEE FOR DETERMINING BOOK PROFIT FOR THE PURPO SE OF CALCULATION OF SALARY TO PARTNERS U/S 40(B) OF THE ACT, WHEREAS T HE ASSESSEE HAD SURRENDERED CASH OF RS.30,50,000/- AS INCOME FROM UNDISCLOSED SOURCES AND WAS NOT HIS BUSINESS INCOME. 2. THAT, IT IS PRAYED THAT THE ORDER OF THE LD. CI T(A) BE SET-ASIDE AND THAT OF THE A.O. RESTORED. 3. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD A ND DISPOSED OF. 2. THE BRIEF FACTS AS ARISING FROM THE ORDER OF THE AO PASSED U/S 143(3) OF THE ACT DATED 23.11.2009 ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: A PERUSAL OF PROFIT & LOSS EXPENSES REVEALS THAT AS SESSEE HAD CLAIMED EXPENSES TO THE TUNE OF RS.1598239/- ON AC COUNT OF SALARY TO THREE PARTNER, EQUALLY @ 532746.33.WHEN ASKED TO J USTIFY THIS CLAIM AS AGAINST THE TOTAL CLAIM OF RS.367162/- MADE IN THE PRECEDING YEAR, THE ASSESSEE CAME OUT WITH THE FOLLOWING REPLY, THERE IS 21% INCREASE IN SALES IN THE YEAR UNDER CONSIDERATION IN COMPARISON TO PROCEEDING YEAR SALE S I.E. 278.81 LACS FROM 229.74 LACS. THERE IS PROPORTIONATE INCRE ASE IN EXPENSES. THE NET PROFIT DECLARED IS RS.18.58 LACS DUE TO INC REASE IN CLAIM OF SALARY TO PARTNERS U/S 40(B) OF THE INCOME-TAX ACT FROM RS.367162/- TO RS.1598239/- BECAUSE AS PER PROVISIO NS OF PARTNERSHIP DEED WE ARE CLAIMING SALARY MAXIMUM AL LOWABLE U/S 40(B) OF THE ACT. SINCE WE HAVE SURRENDERED DIFFERE NCE IN CASH IN HAND AND STOCK IN TRADE FOUND AT THE TIME OF SURVEY U/S 133A OF THE ACT ON A/C OF SALES MADE OUTSIDE BOOKS OF ACCOUNTS AS MENTIONED IN OUR FINAL STATEMENT RECORDED AS PER QUESTION NO. 2 AND 3 BEFORE ITO WHICH IS DULY ACCEPTED BY THE DEPARTMENT. WE CA N CLAIM PARTNERS SALARY U/S 40(B) OF THE INCOME-TAX ACT,19 61 OUT OF AMOUNT SURRENDERED AT THE TIME OF SURVEY WHICH REPR ESENTS OUR ITA NO.273(ASR)/2013 3 BUSINESS INCOME FOR THAT YEAR NOT RECORDED IN THE B OOKS OF ACCOUNTS. IN VIEW OF THESE SUBMISSIONS, THE ASSESSEE WAS CO NFRONTED VIDE NOTING SHEET ENTRY DATED 9.11.2009 AS UNDER: HOW THE CASH DISCLOSURE COULD BE CALLED AS BUSINESS INCOME RESULTING IN BOOK PROFIT OF THE YEAR THUS FORMING THE BASIS OF ALLOWING SALARY TO THE PARTNERS. EVEN IF IT IS CLAIMED AS B USINESS INCOME COMING OUT OF SUPPRESSED BUSINESS RESULTS, IT SHOULD FORM PART OF THE TRADING RESULTS I.E. ENHANCE THE SALES AND THUS GIVING EXO RBITANT G.P. RATE. JUSTIFY THE CLAIM OF SALARY TO PARTNERS ON DISCLO SURE OF CASH MADE AT THE TIME OF SURVEY U/S 133A IN VIEW OF JUD GMENTS OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASES OF: A) NATIONAL LEGAURD WORKS VS. CIT(APPEALS) AND OTHERS (2009) 288 ITR 18 (P&H) B) SARLA HANDICRAFTS (P) LTD. VS. ADDL. CIT (2008) 296 ITR 94 (P&H) IN RESPONSE THERE TO THE ASSESSEE MADE FOLLOWING SU BMISSIONS IN ITS REPLY DATED 16.11.2009. THE CASH IN HAND AT THE TIME OF SURVEY AND SURRENDE RED BY US WAS THE INCOME FROM SALE MADE OUTSIDE BOOKS OF ACCO UNT AS MENTIONED IN ANSWER TO QUESTION NO. 2 AND 3 OF OUR CONCLUDING STATEMENT GIVEN AT THE TIME OF SURVEY. THIS AMOUNT CAN NOT ENHANCE THE SALES UNILATERLY AS IT IS NOT THE SALES PROCEEDS OF SALE MADE OUTSIDE BOOKS BUT REPRESENT THE NET AMOUN T OF INCOME EARNED FROM SALES AND PURCHASES MADE OUTSIDE BOOKS OF ACCOUNT. THE SURVEY WAS CONDUCTED AT OUR BUSINESS P REMISES, WHERE EXCESS CASH WAS FOUND. THE DEPARTMENT OFFICE R CONDUCTED SURVEY HAVE NOT FOUND ANY OTHER SOURCE OF OUR INCOME AND AGREED WITH US THAT IT WAS INCOME GENERA TED DURING THE YEAR OUT OF SALE MADE OUTSIDE BOOKS OF ACCOUNTS . IN NORMAL COURSE OF BUSINESS THE ACTIVITY OF PURCHASE ALWAYS PROCEEDS THE ACTIVITY OF SALE. IF SALE IS ENHANCED THE CORRESPON DING PURCHASE SHOULD ALSO BE ENHANCED AND THE DIFFERENCE SHOULD B E OF RS. 31 ITA NO.273(ASR)/2013 4 LACS AS INCOME WHICH IS ALREADY SURRENDERED AT THE TIME OF SURVEY. THE ASSESSEE WAS AGAIN CONFRONTED WITH THE FOLLOWIN G OBSERVATIONS VIDE NOTING SHEET ENTRY DATED 16.11.20 09: IF THE ASSESSEES CLAIM IS THAT DIFFERENCE IN CASH DETECTED AT THE TIME OF SURVEY WAS ON ACCOUNT OF NET AMOUNT OF INCOME EARNED FROM SALE AND PURCHASE MADE OUTSIDE BOOKS OF ACCOUNT, THEN WHY IT DOES NOT FORM PART OF THE TRADING HEAD AS AGAINST P&L ACCOUNT AS REFLECTED BY THE ASSESSEE. IN THAT S ITUATION IT WOULD GIVE ENORMOUSLY HIGH G.P. WHICH NEEDS TO BE EXPLAINED BY THE ASSESSEE TO CLAIM IT AS BUSINESS INCOME RESU LTING IN BOOK PROFITS WHEREFROM SALARY TO PARTNERS WAS GIVEN. THE ASSESSEE MADE FOLLOWING SUBMISSIONS VIDE HIS RE PLY DATED 23.11.2009. WITH DUE REGARDS IT IS SUBMITTED THAT THE TRADING RESULTS SHOWN AS PER TRADING A/C REPRESENTS THE TRADING DON E DURING THE YEAR AS PER BOOKS OF ACCOUNTS. THE FIGURE OF ST OCK SURRENDER OF RS.150000/- DEBITED IN TRADING A/C AND ADDED IN STOCK IS ALSO NOTIONAL ENTRY WHICH DOES NOT EFFECT THE GROSS PROF IT. ALTERNATIVELY THE SAME CAN BE SHOWN UNDER THE HEAD STOCK IN TRADE IN BALANCE SHEET. THE AMOUNT SURRENDER DURING THE SURVEY FOR BUSINESS DONE OUT OF BOOKS OF ACCOUNTS I NCLUDING THE AMOUNT OF STOCK SURRENDER IS DULY CREATED IN PROFI T & LOSS ACCOUNT AND NET PROFIT IS INCREASED ACCORDINGLY AND CORRESPONDING ADDITION IS MADE IN STOCK AND CASH IN HAND. IT IS, THEREFORE, NOT REQUIRED TO DISTURB THE GROSS PROFIT SHOWN AS PER TRADING ACCOUNT BY THE SURRENDER AMOUNT OF STOC K AND CASH. WE ARE ENCLOSING HEREBY DETAILED REPLY ON THE ISSUE OF ALLOWABILITY OF SALARY TO PARTNERS FROM BOOK PROFIT INCLUDING SURRENDERS AMOUNTS ALONGWITH VARIOUS JUDGMENTS IN O UR FAVOUR, IN ADDITION TO COPIES OF JUDGMENTS OF DIFFERENT ITA T ALREADY SUBMITTED. IT IS PERTINENT TO MENTION THAT MATTER I S COVERED UNDER THE DECISION OF JURISDICTIONAL ITAT IN CASE O F M/S. KRISHANA CLOTH HOUSE (COPY ATTACHED). ITA NO.273(ASR)/2013 5 AFTER GOING THROUGH THE VARIOUS CASE LAWS QUOTED B Y THE ASSESSEE, IT IS VERY CLEAR THAT THE FACTS AND CIRCU MSTANCES OF THESE CASES WERE CERTAINLY DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE. EVEN THE JURI SDICTIONAL ITATS JUDGMENT IN THE CASE OF KRISHNA CLOTH HOUSE WAS REFERRED TO SURRENDER ON ACCOUNT OF DISCREPANCY IN STOCK AND NOT CASH. HONOURING THE SAID JUDGMENT, THE ASSESSEE IS GIVEN THE BENEFIT OF CALCULATING BOOK PROFIT BY INCLUDING DIS CLOSURE OF RS.1.5 LAC MADE ON ACCOUNT OF DISCREPANCY IN STOCKS BUT THE ASSESSEE CANNOT BE GIVEN ANY SUCH BENEFIT ON THE CA SH DISCLOSURE OF RS.30.5 LAC MADE BY THE ASSESSEE EVEN IF THE SAME IS CLAIMED TO BE ON ACCOUNT OF SUPPRESSED SALES, IN VIEW OF FOLLOWING REASONS. (A) SINCE ASSESSEE HAS NO WHERE CLAIMED IN THE SURVEY PROCEEDINGS THAT HE HAS MADE ANY PURCHASES OUTSIDE THE BOOKS OF ACCOUNT AND NO SUCH UNACCOUNTED STOCK WAS FOUND IN PHYSICAL COUNTING, SO ASSESSEES CLAIM THA T UNACCOUNTED SALES HAVE BEEN EFFECTED THROUGH UNACCOUNTED PURCHASES IS WITHOUT ANY BASIS. (B) IN VIEW OF THE (A) ABOVE, IT IS TREATED THAT ASSESS EE HAS SUPPRESSED THE SALES ONLY AND NOT PURCHASES, IT WOU LD GIVEN EXORBITANT G.P. TO THE EXTENT OF 5026221(1976221+3050000) ON SALES OF 31081246 (28031246+3050000) THEREBY GIVING A GP RATE OF 16.17%. BUT THAT IS NOT THE ADMISSION OF THE ASSESS EE AND MOREOVER, THE ASSESSEE HAS NOT RECASTED HIS TRADING ACCOUNT BY INCREASING THE SALES BY RS.3050000/- AND INSTEAD SHOWN THE CASH DISCLOSURE IN THE PROFIT & LOSS ACCOUNT. SO OBVIOUSLY THE CASH IS NOT GENERATED FRO M THE TRADING ACTIVITY OF THE ASSESSEE BUT FROM ANY OTHER SOURCE NOT KNOW OR DECLARED TO THE DEPARTMENT. (C) THE CASH OF RS.3050000/- DISCLOSED BY THE ASSESSEE CANNOT FORM PART OF THE BOOK PROFITS OF THE ASSESSE E FROM ITS DECLARED SOURCES IN VIEW OF (B) ABOVE AND ONCE THIS IS THE SITUATION THE ASSESSEE CANNOT BE ALLOWED TO TAK E THIS FIGURE IN THE BOOK PROFITS ELIGIBLE FOR ALLOWING SA LARY TO THE PARTNERS. (D) THE BURDEN OF PROOF IN RESPECT OF UNEXPLAINED CASH TO THE TUNE OF RS.3050000/- FOUND WITH THE ASSESSEE LIES O N THE ITA NO.273(ASR)/2013 6 ASSESSEE WHICH COULD NOT BE DISCLOSED BY HIM BY ATTRIBUTING THE SAME TO BE THROUGH SUPPRESSED SALES FROM DECLARED AND KNOWN SOURCES OF THE ASSESSEE BECAUSE ASSESSEE HAS NOT INCREASED THE SALES CORRESPONDINGL Y. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE CASH DISCLOSED AT RS.305000/- IS TREATED AS CASH FROM UN EXPLAINED SOURCES AND NOT THE SUPPRESSED PROFITS OF THIS BUSI NESS AND AS SUCH IS NOT TAKEN IN CALCULATING THE BOOK PROFITS E LIGIBLE FOR GIVING SALARY TO PARTNERS. 3. THE LD. CIT(A) DELETED THE ADDITION BY RELYING U PON THE DECISION OF M/S. JAIN SILK STORE, DECIDED BY HIS PREDECESSOR IN APPEAL NO. 457/08- 09/CIT(A)/JAL. DATED 12.09.2011, WHICH ORDER IS REP RODUCED IN CIT(A)S ORDER AT PAGES 15 TO 17. ACCORDINGLY, THE LD. CIT(A ) ALLOWED THE RELIEF TO THE ASSESSEE. 4. THE LD. DR, MR. TARSEM LAL, ARGUED THAT THE ASSE SSEE HAS NOT PLACED ON RECORD ANY DOCUMENTARY EVIDENCE THAT CASH BEEN E ARNED OUT OF PURCHASE AND SALE RELATED TO BUSINESS. THEREFORE, CASH FOUND DURING SURVEY U/S 133A OF THE ACT CONDUCTED ON 02/08/2006, WHICH HAS BEEN SURRENDERED BY THE ASSESSEE, CANNOT BE SAID TO BE OUT OF PURCHASE AND SALE OF THE ASSESSEE MADE OUTSIDE THE BOOKS OF ACCOUNT. THE PARTNERS ARE SPE CIFIED PERSONS AND UNREASONABLE SALARY PAID TO THE PARTNERS CANNOT BE ALLOWED. THE FINDINGS OF THE AO AT PAGE 7 ARE INTERPRETED BY THE LD. DR THAT IF IT IS TREATED THAT THE ASSESSEE HAS SUPPRESSED SALES ONLY AND NOT THE PUR CHASES, IT WOULD GIVE ITA NO.273(ASR)/2013 7 EXORBITANT GROSS PROFIT AND NO VIEW IN FAVOUR OF TH E ASSESSEE CAN BE TAKEN. THE DECISION RELIED UPON BY THE LD. CIT(A) SPEAKS O F EXCESS STOCK AND NOT THE CASH. ACCORDINGLY, THE APPEAL OF THE REVENUE S HOULD BE ALLOWED. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S.BHASIN , ADVOCATE, ON THE OTHER HAND, HEAVILY RELIED UPON THE ORDER OF THE CI T(A) AND ARGUED THAT THE AO AT THE OUTSET HAS ALLOWED THE SALARY TO PARTNERS ON THE ENTRY PASSED FOR THE LESS STOCK FOUND AMOUNTING TO RS.1,50,764/-. AS REGARDS THE EXCESS CASH AMOUNTING TO RS.30,99,827/- FOUND, IT IS PART OF TH E EXPLANATION THAT THE DIFFERENCE IN CASH IN HAND AND STOCK IN TRADE ON AC COUNT OF SALES MADE OUTSIDE THE BOOKS OF ACCOUNT AS MENTIONED AND FOR THE FINAL STATEMENT RECORDED AS PER QUESTION NO. 2 & 3 BEFORE THE ITO , WHICH IS DULY ACCEPTED BY THE DEPARTMENT. IT WAS EXPLAINED TO THE AO VIDE LETTER DATED 16.11.2009 THAT ASSESSEE CANNOT ENHANCE SALES UNILATERALLY, AS NO SALE PROCEEDS OF THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT BUT REPRESE NTS NET AMOUNT OF INCOME EARNED FROM SALES AND PURCHASES MADE OUTSIDE THE BOOKS OF ACCOUNT. THE SURVEY HAVING BEEN CONDUCTED AT THE BUSINESS PR EMISES OF THE ASSESSEE, WHERE EXCESS CASH FOUND AND NO OTHER SOURCE OF INC OME WAS FOUND BY THE SURVEY CONDUCTED BY THE INCOME TAX DEPARTMENT WHICH WAS AGREED BY THE DEPARTMENT THAT IT IS THE INCOME GENERATED DURING T HE YEAR FROM THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. HE FURTHER ARGUE D EVEN IF THE SALE IS ITA NO.273(ASR)/2013 8 TAKEN TO THE TRADING ACCOUNT OUTSIDE THE BOOKS OF ACCOUNT, THE PURCHASE ACCORDINGLY IF TO BE DEBITED IN THE PURCHASE ACCOUN T WITH A DIFFERENCE OF RS.30,99,827/-, THE SAME CANNOT BE TAKEN TO THE TRA DING ACCOUNT SINCE THAT WILL ENHANCE THE GROSS PROFIT OF THE IMPUGNED YEAR WHICH WILL DISTURB THE WHOLE RESULTS OF THE REGULAR BOOKS OF ACCOUNT. ACCO RDINGLY, AS PER ACCEPTED ACCOUNTING PRACTICE, EXCESS CASH SO FOUND/SURRENDER ED HAD BEEN CREDITED TO THE PROFIT & LOSS ACCOUNT AND DEBITED TO CASH IN HA ND WHICH IS PART OF THE ASSET SIDE OF THE BALANCE SHEET. THE AO HIMSELF HAS ACCEPTED THAT THE ASSESSEE HAS SUPPRESSED SALES BUT HAS GIVEN THE FIN DING THAT THE ASSESSEE HAS NOT CLAIMED ANY PURCHASES OUTSIDE THE BOOKS OF ACCO UNT. THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S.BHASIN, ADVOCATE, ARGUED HOW THE SALES OUTSIDE THE BOOKS OF ACCOUNT ARE POSSIBLE WITHOUT MAKING ANY P URCHASES OUTSIDE THE BOOKS OF ACCOUNT AND IT IS WITH THIS BACK GROUND TH AT PURCHASES AND SALES ARE MADE OUTSIDE THE BOOKS OF ACCOUNT AND THE PROFIT E ARNED AMOUNTING TO RS.30,99,827/- HAS BEEN CREDITED TO THE PROFIT & LO SS ACCOUNT. THE PROFIT & LOSS ACCOUNT IS NOT REQUIRED TO RE-CASTED AS REQUIR ED BY THE A.O. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE H AD SUBMITTED THE EXPLANATION, WHICH IS PART OF AOS ORDER AT PAGE 1 THAT DIFFERENCE OF CASH OF RS.30,99,827/- IS ON ACCOUNT OF SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. ITA NO.273(ASR)/2013 9 THE CLAIM OF THE AO THAT THE ASSESSEE HAS NOT CLAIM ED THE PURCHASES OUTSIDE THE BOOKS OF ACCOUNT IS WITHOUT PROPER UNDERSTANDIN G OF THE ACCOUNTING. SINCE THE ASSESSEE HAS ALREADY DECLARED EXCESS CASH IS OUT OF THE SALES OUTSIDE THE BOOKS OF ACCOUNT AND ALSO SUBMITTED BEF ORE THE AO THAT EXCESS CASH SO SURRENDERED IS OUT OF PURCHASES AND SALES M ADE OUTSIDE THE BOOKS OF ACCOUNT AND IT IS THE AMOUNT OF INCOME EARNED FROM THE PURCHASES AND SALES MADE OUTSIDE THE BOOKS OF ACCOUNT AS IS EVIDENT FRO M THE EXPLANATION OF THE ASSESSEE DATED 16.11.2009 WHICH IS AVAILABLE AT PAG E 6 OF AOS ORDER. 6.1. AS REGARDS THE DECLARATION OF SAID AMOUNT IN T HE TRADING ACCOUNT, THE SAME WILL DISTORT THE REQUIRED GP DECLARED BY THE A SSESSEE AND IT IS NOT THE ACCEPTED ACCOUNTING PRACTICE. TO OUR VIEW, THE ASSE SSEE HAS RIGHTLY PASSED ENTRY BY DEBITING TO THE CASH IN HAND AS INCOME EAR NED IN THE BALANCE SHEET AND BY CREDITING THE SAME TO THE PROFIT & LOSS ACCO UNT WITHOUT TAKING THE SAME TO THE TRADING ACCOUNT OF THE IMPUGNED YEAR. A CCORDINGLY, WE FIND NO DEFECT IN ACCOUNTING ENTRY OF THE ASSESSEE DECLARED IN THE BOOKS OF ACCOUNT/PROFIT & LOSS ACCOUNT. 6.2. AS REGARDS THE DISALLOWANCE OF SALARY UNDER SE CTION 40(B), THERE IS NO DISPUTE TO THE TERMS OF PARTNERSHIP DEED AND THE AS SESSEE HAS NOT CLAIMED ANYTHING BEYOND AS ALLOWED U/S 40(B) OF THE ACT, SI NCE IN THE COMPUTATION ITA NO.273(ASR)/2013 10 U/S 40(B), THE BOOK PROFIT IS USED, WHICH HAS BEEN EXPLAINED IN EXPLANATION 3 TO SECTION 40(B)(V), WHERE BOOK PROFIT HAS BEEN DEF INED TO BE NET PROFIT AS SHOWN IN THE PROFIT & LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR COMPUTED IN THE MANNER LAID DOWN IN CHAPTER IV-D. THEREFORE, IN THE FACTS AND CIRCUMSTANCES, THE AO CANNOT GO BEYOND PROFIT & LOS S ACCOUNT, AS DRAWN BY THE ASSESSEE IN WHICH WE FIND NO DEFECT, WHICH IS A S PER BOOKS OF ACCOUNT AND BOOK PROFIT HAS RIGHTLY BEEN DRAWN BY THE ASSES SEE AND NO PART OF THE SALARY CAN BE DISALLOWED. 6.3. THE ARGUMENT OF THE LD. DR THAT PARTNERS ARE S PECIFIED PERSONS AND UNREASONABLE SALARY CANNOT BE ALLOWED, CANNOT BE AC CEPTED BECAUSE THERE IS NO DEFECT POINTED OUT IN THE TERMS OF THE PARTNERSH IP DEEDS AND SALARY HAS BEEN ALLOWED AS PER PARTNERSHIP DEED. THERE IS NO Q UESTION OF REASONABLE OR UNREASONABLE OF THE SALARY IN THE GROUNDS OF THE R EVENUE. THE DECISIONS RELIED UPON BY THE AO ARE NOT APPLICABLE IN THE PRE SENT FACTS AND CIRCUMSTANCES OF THE CASE. THE DECISION RELIED UPON BY THE LD. CIT(A) IS APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES A ND ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HA S RIGHTLY DELETED THE ADDITION SO MADE BY THE A.O. HENCE, ALL THE GROUND S RAISED BY THE REVENUE IN THE APPEAL ARE DISMISSED. ITA NO.273(ASR)/2013 11 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.273(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH DECEMBER., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13TH DECEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CHAWLA FURNISHERS, HOSHIARPUR. 2. THE DCIT, HOSHIARPUR. 3. THE CIT(A), JLR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.