SG INTERNATIONAL,KANPUR vs. INCOME TAX OFFICER-1(4), KANPUR

ITA 135/LKW/2022Status: DisposedITAT Lucknow08 August 2022AY 2015-166 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that mentioning remuneration as per the provisions of Section 40(b) is permissible, citing a Hyderabad Bench judgment. The disallowance made by the assessing officer was set aside.

What were the facts?

The assessee claimed remuneration to partners, which was disallowed by the authorities below. The supplementary partnership deed mentioned remuneration as per Section 40(b) of the IT Act, with partners receiving 50% each of the profits.

What were the issues?

Whether remuneration to partners is deductible when specified as per Section 40(b) in the partnership deed, rather than a fixed amount. Whether the adjustment made under Section 154 was correct.

Which sections of the Income-tax Act were involved?

Section 40(b),Section 154,Section 44AD

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Income Tax Appellate Tribunal, LUCKNOW BENCH ‘SMC’, LUCKNOW

Before: SHRI T. S. KAPOOR

For Appellant: Shri Mohd. Shahzeb, C.A
For Respondent: Shri Harish Gidwani, D. R
Hearing: 03/08/2022Pronounced: 08/08/2022

This is an appeal filed by the assessee against the order of learned CIT(A) dated 25/03/2022. In this appeal the assessee has taken the following grounds:

“1. That the learned CIT(A) has taken a wrong view against the applicability of section 40B(v) as the partners remuneration is duly deductible after computing the profit u/s 44AD of the I.T. Act, 1961 for assessment year 2015-16. 2. That having regard to the facts and circumstances of the case, learned CIT(A) has erred in law and on facts in confirming the decision of learned Assessing Officer in making adjustment u/s 154 of the I.T. Act, 1961.” Assessment year:2015-16 2

2.

Learned counsel for the assessee, at the outset, submitt

The order continues below.

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