Nand Mohan Madan Mohan, Varanasi V. ITO, Varanasi

ITA 359/ALLD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94946 (ITAT-ALLAHABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 11-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH PATHAK
• Assessee Lawyers: PRAVEEN GODBOLE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH ALLAHABAD BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER ITA NO. 35 9 /ALLD/201 3 ASSESSMENT YEAR: 200 9 - 10 NAND MOHAND MADAN MOHAN, VS. ITO, WARD - 3(2) K 53/46 - C, VISHESWAR GANJ, VARANASI VAR ANASI PAN: A ABFN 8550D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAVEEN GODBOLE, A.R. REVENUE BY : SHRI UMESH PATHAK , DR. DATE OF HEARING: 11 .08.2015 ORDER PER : P.K. BANSAL , A CCOUNTANT MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , VARANASI DATED 23 . 09 .201 3 FOR ASSESSMENT YEAR 20 10 - 11 . 2. THE ONLY ISSUE INVOLVED IN GROUND S NO.1 TO 6 RELATE TO THE DISALLOWANCE OF SALARY TO PARTNER FOR RS.144 000/ - AS CONFIRMED BY CIT(A). 2 3. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS PAID SALARY TO EACH PARTNER AT RS.1,44,000 PER ANNUM WHILE IN THE PRECEDING ASSESSMENT YEAR THE ASSESSEE HAS PAID SALARY AT RS.60,000/ - PER ANNUM TO EACH OF THE PARTNER, T HEREFORE, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.1,44,000/ - AND HE IS OF THE VIEW THAT THE REMUNERATION TO THE EXTENT OF RS.72,000/ - TO EACH PARTNER WAS UNREASONABLE. 4. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ADDITION. 5. I HEARD THE RIVAL SUBMISSION AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW, I NOTED THAT THERE IS SPECIFIC PROVISION FOR QUANTIFYING THE REMUNERATION PAID TO THE PARTNER. THE FIRM CANNOT PAY REMUNERATION TO THE PARTNE R S IN EXCESS OF THE LIMIT SPECIFIED U/S.40(B)(5) OF THE INCOME TAX ACT. THIS SECTION RESTRICTS THE LIMIT ON PAYMENT OF THE REMUNERATION TO ALL THE PARTNERS AND HAS ALSO GIVEN THE METHOD OF THE CALCULATION OF THE REMUNERATION. THE CONDITIONS SPECIFIED THERE IN ARE THAT THE PARTNER MUST BE A WORKING PARTNER. THE REMUNERATION PAID TO THE PARTNER MUST BE AUTHORIZED AND IS IN ACCORDANCE WITH THE TERMS OF THE PARTNERSHIP DEED. IT IS NOT THE CASE OF THE REVENUE THAT THE PARTNER S WHOM THE REMUNERATION HAS BEEN PAID ARE NOT THE WORKING 3 PARTNER OR AS DEFINED UNDER EXPLANATION - 4 U/S.40(B) IT IS NOT THE CASE OF THE REVENUE THAT OVER ALL REMUNERATION PAID TO ALL THE PARTNER EXCEEDS THE LIMIT AS HAS BEEN SPECIFIED U/S.40(B)(5) READ WITH EXPLANATION 3 OF THE INCOME TAX ACT. IN VIEW OF THIS FACT, I SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6. THE NEXT GROUND RELATE TO CHARGING OF THE INTEREST U/S.234 A,B,C . S INCE THIS GROUND IS CONSEQUENTIAL IN NATURE , I ACCORDINGLY DIRECT T HE ASSESSING OFFICER TO RE - COMPUTE THE INTEREST CHARGEABLE U/S.234 A,B,C AFTER GIVING EFFECT TO THIS ORDER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 / 9 /201 5 . SD/ - ( P.K. BANSAL ) ACCOUNTANT MEMBER DATED: 7 / 9 /201 5 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR