A.C.I.T.. CIR.-3, NAGPUR vs. M/S WELDWELL ELECTRODES, NAGPUR

1S8 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER IANqs262 263,264and 265LNAG2O15 Assessment years 2006-02 to 2002-10 Assistant Commissioner Incame Tax, Circle-3, Nagpur: of Vs. Ns.Weldwell Electrodes, D-59, Hingna Road; MIDC, Nagpur 440 028. PAN: AAAFW2633R (Respondent) (Appellant) Appellant by Respondent by Date of hearing Date Of pronouncement Shri Gitesh Kumar, JCIT Shri ) MRanade, CA 23/112017 24/11/2017 QRDER PER P KBANSAL VP Since all these appeals involved the comman issue, therefore, all these appeals are disposed of by this common order; 2 In al tese appeals, the Revenue has taken following grounds of appeal: "I On the facts and circumstances 0f the case; ad in law; the CITIA} erred in deleting the addition made #fs. #O(bJ) in respect of remuneration paid to Non working partner Mrs. Manjushree Shree Soman a5 under : ScNlo 1 2 3 4 AYeads) Remuneption paid (Rs 2005-07 120102 2007-08 32,81,3261 2008-02 47,72,5958 2009-10 68.55,.620 ADPD IT;: Nos_262 to 265 Assessment year:2005-06 's2 2 On the facts and circumstances Of the case ; ad In law, the CITIA) erred in holding that Mrs. Manjushree Soman 15 0 working partner eligible for remuneration: 3 On the facts &nd circumstances Of the case; and in Iaw, the CITIA) was not right in being infiuenced by the charges made in the partnership deed in the Fyear 2013-14 While contemporaneous evidence should relate to the years under appeal 3 The brief facts of the case are that the assessee subnitted the return for the A.Ys 2006-07 2007-08, 2008-09 and 200g-10 showing a income of Rs.1,44,84,521/-, Rs.90,27,977/-, Rs.1,41,61,266/- and Rs.2,04,31,110/- respectively: Assessee is engaged in the business with manufacturing of welding electrodes Survey 4/s.133A of the Income Tax Act was conducted at the business premises of the assessee On 08.11.2012 It was noted by the Assessing Officer that the assessee has paid remuneration tq one of the partrers of the firm Smt: Manjushree Soman even though she was not working partner a5 per provision section 4O(b): PPPEL 4_ The Assessing Officer, therefore, invoke the provision of section 147 of after recording the reasons u/s.148(2) of the Act re-opened all these assessment years. The Assessing Officer asked the assessee on the remunerations paid to Mrs. Manjushree Soman should not be disallowed and accordingly, disallowed in suM Qf Rs.IZ lakhs in assessment vear 2006-07 , Rs.32,81,326/- in the A.Y, 2007-08, Rs.47,72,505/-in AY. 2008- 09 and Rs.68,66,620/- in AY, 2009-10 respectively. 5 The assessee went in appeal before the CITA(A) and challenged the validity af the reopening as well as the addition on merit The CIT(A) dismissed tne legal ground taken by the assessee in respect Qf the ITANos_262 to 265 Assessment year;2005-06 IEv reopening of the assessment; but deleted the disallowance made in each of the assessment vear u/s.40(b} 6_ We have heard the rival submissions and carefully considered the same The Id.DR vehemently relied on the Assessing Officer, while the Id.AR relied on the order of the CIT(A) an re-treated the submissions made before him; 7 We noted that the CITIA) has deleted the addition made by the Assessing Officer in each of the assessment year by holding as under "5.3 I have considered the facts 0f the case ad submissions of the appellant:; There i5 substantial mert in Ehe various submissions made The main arguments raised by te appellant in its submissicns are a5 Under 1 The Actlon of the Id. AO is revenue neutral 2 On the basis af the staterents recarded it cannot be concluded that Mrs. Soman in not actively Involved in the business 3 Evidences were produced to establlsh that Mrs. Soman was Involved in vared activites 0f the business of the filnm 4 The partners are jointly and severally Ilable far acts of other partner &d that the liabilllty of each partner Is unlimited, 5 Mrs. Soman is presently having 75% share in Prafit _ { lass and is te maln working partner 35 Mr: Sudhir Soman has retired from partnershlp firm W.ef 01,10.2013 which Would establish that she has always been actively involved In tne business 5.4 There is mert In each 0f the above issues raised- Taking up the first argument of the appellant; it has been correctly pointed out by the appellant that thls entire exerckss is Revenue neutal a5 both the Individual pattner as wellt 25 the fr are taxed at the 53m8 rte an therefore the payment Of remuneration to the partner cannot be viewed a5 a attempt to concea} Income t0 redduce tax liability. The expenses deblted in te boks of the firm would become Income in the hands of the partner If the Id. AO taxes the fir by disallowing the remuneration; he Will als0 have to Issue refund to Mrs: Soman a5 the same Would not be taxable in the partners hand a5 it Is disallowed in firms Case Thus the net effect of thls exercise is tax neutral for the department a5 both the firm and partner fall in highest tax slab. 3 ITANos262 to 265 Assessment year;2005-06 55 Various case laws have commented upon the futility af undertaking such a exercise Where increasing income in one hand and reducing the income In other hand with almost the same tax effect does not result in any net benefit t the Revenue; In the Case of Shrl Mohd Nizamuddin VS, ACIT, on similar facts, the Hon ble Jaipur ITAT Bench In ITA No.41/JP/2O13 held a5 under "4.6 We have Carefully Considered the submlssion made by both the parties . We do not aree With the contention %f the Id. CIT (A) that &r the partier were not working partners; Which finding % recorded without any basis__. 7t i5 notced that atthough te Tirm was constituted m A, X 2004-05 and # i5 not disputed that te assessee finm has been making this claim right since A.Y 2004-05 but all alng the revenue has been accepting such & clalm even in te assessment made under scrutiny hence We do not find anY justification to make 0 departure from te settled posltian in the past without bringing any materia; change In the facts and the Circumstances Of the cse In this year: In ay case; the issue I hand Is tevenue Is neutral In as much a5 even assuming 3 certain Fart of the claimed remuneration 1 disallowed in the hands &f the firm fhe same cannot ba beatedd b be an Income frm business in tha hands &f the parters a 3 necessary Safeguard has already been provided under the proviso below the Sec 28(v} against te double taxation of the same Incore hence; even # the disalbwane 52 made i5 upheld, Deductian to that extent has t2 be allowed in the hands Qf the partersfs Thus; revenug shali not be put t0 any bss if the remuneration a5 caimed; Is allowed in the hards 0f the assessee Fn We thusz Iind no justification I the disallowande s0 made and confirmed, fr te detailed reasons Stated hareln above; hence; thg disallowance Of-Rs, 20,47,001- made Us 40(b) Is hereby deleted. Therefore;, Ground no. 2 ralsed by te ass25582 Is allowed 6, In the result appeal of the assessee Is partly allowed 5.6 Thus the Hon'ble Jalpur Bench has held the Revenue shall not to be put ta any lss if the remuneration caimed I5 aliowed in the hands Of the aSsessee frm & same cannot be treated a5 Income fram buslness in the hands of the individual Partner Similary in the case of Mls Om Terrace, SuratVs DCIT Surat ITA No; 4A0/Ahd/201Z, it was held by the Hon ble ITAT Ahmedabad Bench a5 under- P Pe "No dalowarce from partrerg' remuneration was therefore Warranted In ay case the Whole exerise %f disallowlng Aartners' remuneration {5 tax neutral a5 oniy the amount allowex a5 deduction is required t be taxed in the hands &f the partner: 5.7 Attention is also invited to the decision 0f Hon ble Bombay High Court in the cse %f Commissioner %f Income tax Vs Nagari Mills Co. Ltd 33 IR 681 & Delhi High Courts judgment In the Case %f Commissioner Of Income Tax Vs, Shri Ram Pistons ad Rings Ltd. (220 CTR 404} Wherein It Was held that the department should not fritter away its energy In Such matters Which are tax neutral and that it is 2 pity that 50 mudh time &d energy are spent to determine the Year of taxability of the incore; The Said judgments have been extensively followed in 3 large number of cases In which & exercse undertaken by the department Was fundamentally tax neutral In this context judgment of Honble Delhi High Court 161 3 M#tak TTA Nos_26Z to 265 Assessment year:2005-06 5 14 2 in the case of Cormissioner of Income tax Vs Trivenf Engineering & Industries {ITA No. 346 of 2009} Is reproxuced here under ",1Z We are reminded of the classic Observations made by Justice Tendolker In the Case Of the Commissioner of Incme-tax Vs. Nagri Mills Co. Ltd. [33 IR 681} which reads as under: "Wz have aftan mpndered why the Income-tax authorities,; In 3 Matter such &5 thls where the deduction I obviousty & permissible deduction under te Inrme-tax Ad ralse disputes as to the Year in which the deduction should be allowved The question a5 t the year in which & deduction i$ allowable may be Material when the rate %f tax chargsable_ On be asses588 In two different years is dlfferent; but in te case af Income Of a company, tax is abacted at 2 uniform Tte ad whether te duduction in respect or bonus was grantexd In te assessment accounting Year 1952, that {s in the assessment year 1953-54, should be 3 Tatter of no consequence to te Department; and one should hawe thought that the Department would it Fritter away its energies In fighting matters 0f thls kindd; But; obvously; judging Ian the references thai comle & tp 05 every nOw and thef; the Department appears to delight In raising polnts ar this character which do not affet the taxability Of the assessee or tte tax that the Department is Ilkely t0 collect from hlm whether In one year Or tte other: 13 The aforesaid obsenvations of the Bambay High Coutt were reiterated by this Court In the case f Commissioner of Income Tax Vs, Shri Ram Pistons ad Rings Ltd [2Z0 CTR 404]; &5 under; "Finally, we May only mention what has been articulated by the Bombay High Court inCommissioner of Income Tax Delhl; Ajmer_ Rajastha and Madhya Pradesh VS. Nagri Mills Co. Ltd. [1958] 33 ITR 681 a5 follows; In the reference that Is before U5 there is no doubt that the Assessee had incurred a expenditure The only dispute I5 regarding ttg date on which te Jability Iiad crystalilzed. It appears that there WaS nO change In te rate Of tar Fr the Assessment Year 1983-84 withthich we ar Corkerned, The queston; therefore; I only with regard ta the year 0f deduction and 1 is a pity that alt of us have to expand s0 muth tlme and engrgy crlly to determine the year of taxability of the amount: G { m 14 In such dxcumstances; we are 0f the view that insofar 25 present appeal Is concered, substantlal questions of law that need to be answered dbes not arise: We; terefore, disniiss ttls appeal on this ground afore 5.8 Thus from the above judgment it is seen that When the action %f the department is tax neutral no purpose is served by. adding the amount in one ITANos.262 to 265 Assessmnentyear.2005-06 case &d giving corresponding relief in another case. Here; however; tf-5 action Of the LdAO Is all the more objectionable in view of the fact that while he has disallowed the claim 0f remuneration he has not given correspanding relief in the casz of individual pzrtner by reducing her income to the extent Ol disallowance made in the case Of the Firm. Ir the Ld.AO was Of the view that the remuneration was not allawable in the case of the firmz cotresponding relief in the case af the partner should have been simultaneousty initiated and the Income of the partner should have been reduced acrordingly. Once having held that the temuneratlon was not allowable 2 expenditure in the case 0f the appeliant firm , the department cannot take the contradictory view in the hands Of the rexipient of remuneration &nd decide that no relief is required ta be given in the hands of individual partner The department cannot approbate as well as reprobate The maxim qui approbation reprobate (one who approbates cannot reprbate) is firmly embodied in English Common Law and often applied by Courts in this county. It is akin to the doctrine 0f benefts and burdens; which at Is most basic level provides that 4 person taking advantage under an instrument that both grants & beneft ad imposes & burden, cannot take the former without complying with the latter: A person cannot approbate & reprabate or accept ad reject the same instrument He cannot; t use the words Of Honyman } In Smith V Baker (1878) LR & CP 350 at p. 357 'at the same time blow hot and cold; He cannot say at &ne time that the transaction is valid and thereby obtain some advantage to which he could only be entitled &n the footing that it is valid; ad &t another time say it is void far the purpose of securing some further advantage. The fact that the Ld.AO has disallowed remuneration on one hand and has not given corresponding relief in the case &f the partner in her individual capacity ad this Itself shows that the LdAO is not very sure Of the view takent by hlm. 5.9 Thus It Is evdent that since the appellant frm and the partner are both subject to be taxed at the maximum rte; te payment of remuneration is In no Wby 3 scheme t2 conceal income Or evade tax There Is evidently no DX planning or tx saving mechanism employed by the assessee or Its partners: The department will tax the firn by disallowing the remuneration 0n 0ne hand and &n other hand department will have to issue refund to Indivdual partner (Mrs;}Soman) &s the same would not be taxable in partners hand as I % disallowed in frms ca5e, Thus the net effect of this exerdise is tax neutral For department a5 both the flrm and partner fall in highest tax slab: Hence on this ground itself; this addition is unwarranted and unjustified solely n ground of tax neutrality. p 6, Coming t the second argument 0f the appellant; 0n perusal of the submlssion made by the appellant before the Ld.AO; the facts brought on recard in te assessment order and 0n perusal 0f the two statements rerorded of Smnt; Saran it is seen that there Is no materal befare the Ld.AO to come to the conclusion tat Snt; Soman 1s not & working partner or that she is not actively engaged In the buslness activity of the appellant frm: In the two statements recorded durlng and after the Survey Ufs 133A about 30 questions were asked to Smt; Soman ad the LdAO has based the entire disallowance on about 5-6 answers &nd has come t the conclusion that she {s not actively Involved In the business activities In the proress the Ld.AO ha5 totally ignored 163 TalA 3 ) [TA.Nos.262 t0 265 Assessment year:2005-06 1L5 answers given to 24-25 questions from which it beromes evdent that Smt Soman is & partner who is actively involved in the business activity . 6.1 In its submission; the appellant fir has given detailed explanation with regard to each of the questions that the LdAO has focused upnn: The explanation of the appellant clearly establishes that the concusion drawn by the LdAO to the said question arg erroneous &nd misleading: The appellant firm is 30 years Old; well established and Is staffed with persons having designation of Manager; General Manager etc who are able to take care of dey to day buslness activties and hence requirement of the partners to be Involved in the day to day activitydaes nt arse The role of the partner would broadly be to declde policies; glve strategic inputs ard to monitor various aspects of business: 6.2 The Fact that Smt; Soman stated In a answer that she only ocrasionally goes t the firm premises or that she is not assoxiated with day to day workingof the fim or that she has nobody reporting to her; cannot lead to the conclusion that she is not actively Involved In the business activities of the flrm: Modern business are complex entities that requires continue strategic thinking planning; formulation af business policies and evolved senior level intervention, Any partner Who is even slightly involved In such matters Would be contributing immensely t0 the business activity 0f the Firm. Being & partner;Smt Soman in addition t0 policy formulation &d strategic thinking along with the other partner; could in any case call for any empioyecto direct 0r t2 guide him / her: The fact that nobody reports toSmt: Soman does not by itself Iead to condusion that she is not actively involved In the business activties of the firm &s she can call any employee and ensure compliance to the needs and requirements of the organization. PPE 4 6,3 In te above context; it Is also vital t see the answers glven by Smt; Soman t0 varous questions asked to her: In her statement recorded on 08-11- 2012 Smt: Soman gave details like -Assessing Officer; PAN and details regarding the firm and alsp Infored the LdAO that she visits the premises When the other partnier is absent and that 35 & partner she Is getting remuneration and prort fram the firm. She has further stated that she is & Postgraduate in English Literature and Music and Is Joklng afer the administration ad personal relatlon of the firm and ensures friendiy relation with the staff: On being asked to give details of staff who &re on pay roll of the firm she gave names of four staff Members and their area of specialization and on belng asked where the bpoks %f arcounts are maintained;, she explained that the same are maintained in the company premises Itself: Further; on being asked regarding the instances of sale and purchase of property by the fin; she explained that & land had been purchased alngwith shexd in plot No.57 about 3 years back and that &n advance f Rs.1,5 crores has been "given In January 201Z to one Mfs JD. Bullders for purchase Of one plot in Shivaji Nagar; Nagpur though the sale deed has not been executed a5 yet On being asked she further infarmed that she slgned the Income Tax returns and documents regarding the purchase of Iand 0f the fm. Thus &n perusal of statement recorded on 08-11-2012 it becomes evident that Smt; Soman is actively involved in business actvity of the Finm and Is aware Of the staff members, the nature Of work they took after and $ also Km aizil ITA.N0s.262t0265 Assessment year;_ 2005-06 well aware regarding books Of accounts ad sale purchase of immovable property by the appellant fin. 6.4 Also in the statement recorded on 29-11-2012, she explalned that she has no other business interest other than the appellant firm &d on being asked bank account details, she gave Information about the Pratap Nagar; Bank of India Branch. Onbeing asked regarding ownership of movable assets she stated that te fn awned Toyota Altis and Hyundai 1-10 and on being asked to give details of withdrawals during the FX 2011-12, she explained that the withdrawal af Rs.1,5 dores was made from Bank of Indla. On being asked if she WZs assoclated with decision maklng in the firm she replied in the afnative; She furtter stated tat she is invalved in purchase of land; machine applying for bank Ioan etc; tough she does not remember the exact names of the parties from whom the machines were ~purchased: She further explained the Sources of funds; investments in various Mutual funds, Insurance palicies etc: are her salary. Her again Smt Soman is very clearly able to establish the fatt that she is actlvely involved in the business activities 0f the firm &d is aware of all business related aspects as otherwise she would not be in 8 position to give such details as the bank account; movable assets, sources Qf her varous investments; details of withdrawals from bank account etc 6.5 In the face or Such clear assertions by Smt Soman pf her continued involvement in alI facets of business activties, the canclusion af the Ld.AO that sne is actively involved in the business On} the basls Of 4-5 answers is mlsplaced and inrorrect Evidently Smt; Soman Is able to establish that she is actvely involved in @very aspect of business though she may be visiting the premises occasianally: There Is abundant judicial authorlty In this regard 6.6 The Honorable Gujarat High Court in te case Qf CIT VS Matwarlat Tribhovandas reported in 87 ITR 703 answered In the afmative the question a3 to Whether expression "actively engaged in canduct Of buslness" occurring in Section 2(7)(i)b) does not necessarly signify active and continuous participation in actual transaction of day-to-day business 0f fimm and held that It Is Rlexible enough t0 take in case 0f" 2 partner who devotes time; attention ad Iabour to spme actilty Or assignment calculated 0r designed to lead to preservation growth or advancement of business 0f firm. The relevant portion af the order is reproduced hereunder: "Accordingly, before the business income 0f an asse55es; who is 3 partner 0f a fim; could be treated &5 eared Income; the conditions which are required to be satisfied are that the assessce should be: () actively, {I) engaged in, (Hi) the conduct of the business of the firm, () for the whale of tne previous year; Te submlsslan was that the flrst tree af the four conditions are expressly found in secton 2(7 H(MX b) and the fourth condition is necessarily implled terein having regard to the Manner in which & partnership functions ad its accounts are made up. Unless the assessee is able to shoW ; therefore; that for the whole of the relevant prevous year he was continuousty and in an active manner 1E s PPPE 3 0444 9 ITANos,262 to 265 Assessment year;2005-06 Lc occupied ar busy with the wotk of carrying On Qr transacting the business of the frm , the business income earned by him as ? partner would not Quallfy for the garned incame relief M; Kajl; leamed counsel for the assessee, contended on the other hand that the words DOW under consideration require to be construed broadly having regard t2 the context In which they are used. He urged that it is not unknown that in & partnership there ae parters Who, in popular partance; are called "sleeping partners and who are brought into the firm either berause Of their financial contribution or family ties Or the like; A sieeping partner , though really not engaged In the conduct Of the business Df the firm, would nevertheless be considered as having been So engaged in the eye Of Iaw because Of the principle of mutual agency involved in partnership &d his share in the profits 0f the firm would, therefore qualify for te earned Income relief in his hands, The wprd "actively which is prefixed to the expression "engaged in the canduct of the business" , Is Used predisely with & view to ersuring that a partner who participates in the corvduct af the business of the firm only through the agency Of his CO-partners does not get the benefit Of the eamed income relief The expression "actively engaged in the conduct of the business , proceeded the argument read in the context ad a5 a whole; meant that the pattner should personally particlpate in some manner in the business of the iin that i5, undertake some actlvity which i5 necessaty or desirable for the preservation &nd growth of the business of the Arn. The expression according to the assessee, did not signify that the partner should take active part In the actual day-to-day transaction 0f the business ofthe Arm. It Was also urged that participation in the conduct df the business need not have continued for the whole Of the prevlous Year ad that If it Is shown that the concemed partner his partilcipated in the conduct of the business Of the firm for a substantial part of the previous year; the business Income eamed by him would qualify for the eared income relief; 3 41 The questlon is as to which Out of the two rival constructions suggested at the Bar Should be preferred, Leaving out of consideration for the time being the question whether or not the engagement in the conduct af the business must be fr the whole of the previous year; we shall first attempt: no ascertain the Plaln grammatical meaning Of the expression "actively engaged In the conduct of the buslness": The ward "actively" ordinarily means In an active manner, that Is, effectively energetically and diligenty: It Is sornetimes aiso used to signify direct participation in contradistinction to Impersonal interest 0r passive role, Tne expression "engaged in" Is a term Of various meanings depending on the context in which it is used but ordinarily it is intended to signify continuous occupation or emplyment; it Involves the concept of continuity of action 35 well aS Of physical participation: However; the term Is. Often employed to denote & present obligation t devote time; attention and eftforts to & particular activlty; a/though; for the time belng; there may _not be ay actlve participaton Qr wholetime Involvement In such activity, The expression "the conduct of the business in 2 narrower Sense means actual direction, handiing, management or regulation of business day-after-day. In & broader sense, however; i $ also ITANos.Z6zto 265 Assessment year:2005-06 10) capable of connoting contribution to the business by carrying Qut some assignment Or undertaking; some activity unconnected with the day-to-day managenent af the business; which might uitimately lead to the preservation and development of the business: It would thus appear that on & plain meaning of the words comprised in the relevant phrase; both constructions-the natower 35 well &5 the broader_for which the parties have contended are possible We Would, in these circumstances, naturally prefar that Construction which favour the assessee. 6.7 The Honorable ITAT Delhl In the case &f Vivek Ispat Udyog vS Income Tax Officer (2005) 95 TT} Delht 1090 held as under: "9, On going through the observations of the leamed CIT(A); it is found that he has not treated Shri Pawan Kumar Pahadia a5 & working partner On the ground that he was not & whale-time worker; This approach cannot be sald to b2 justified. A partner may supervise ad Control in & case Qf & firm at different place Kf he devotes time ad remains engaged in the business of the firm, it cannot be said that he is not actively engaged in tne business 0f the fir. It may be pointed out that the same CIT(A} has upheld the action of the AO In allowing reruneratlon to Shri Sunit Kumar Navetla who top "as residing at Calcutta ad was supervising the afairs Of the fin at Ghazlabad J"he only reason for allowing remuneration to that partner Is that the telephane number of Calcutta belonged to him So far as Other partner , namely, Shri Pawan Kumar Patadia in WhoSe case remuneration has been disaliowed i5 concerned, in my vlew; the difference made bY the learned CITIA) cannot be appreciated. From the documents contained in the paper book; it Is found that he a5 making correspondence to tte firm ad was also issuing Instructions on telephone Thus, it cannot be said that he was not conducting the affairs Of the business &r ot engaged in the conduct of the working of the firm In te case 0f CT v NatwarialTribhovandas (supra), terz "actively engaged In the conduct of the business" accuring in Section 2(7HiKb) of the Finance (No. 2) Act^ 1962, Was explained by the Honble Gujarat High Court and it was Observed that the expression must be glven liberal meaning: It was held that the Said expresslon does not necessarlly signlfy active Or continuous particlpation In the actual transaction or tte day-to-day business Of the firm and it is flexible enough to take in the Case 0f & partner who devotes tlme; attention and supervlse the work Thus; 3 partner t0 be & working partner for tne purpose or Section 2( }i}b) als0, it Can be said that sufficient requirements Of law for the Said parter to whom the remuneration Is pald is to supervise the Work of the fin from dlfferent place &nd may be by devoting hours and not & whole day: In MY considered opinion; the cain of the assessee-fimm was fully justified ad the leamed CIT(A} was not justified in uphalding te view of the AO. The disallowance Of remuneration to the partner t the tune of Rs 39,100 &d the addition of the same amount Js, therefore; deleted. The ground Na. 2 i5, therefore; alawed In favour &f the asses5e5, 6.8 The Honorable ITAT Kolkata , in the case of S.BAgencles, Kolkata Ws ACIT In ITA No, 680/K0l/2O12 decided a case on similar facts. In the sald case, the clalm 0f Rs: 2,20,002f- remuneration to one of the partners had been restricted to Rs 36;000/- by the Id. AO &nd In appeal the learned Commissioner E # 1( 2 9 ITANqs,262t 265 Assessment year:2005-06 1I; of Income- tax (Appeals) allowed the same to the extent of Rs. 1.2O lakh. The reason far making the disallowance was her statement which had been taken wherein , 35 per the Id. AO it was proved that Smt Madhumita Paui did not know Of the operations of the assessee5 business. In such facts it was held a5 under:

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