JKM LEATHERS,CHENNAI vs. DCIT,

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 12, Chennai, dated 22.03.2016 and pertains to assessment year 2010-11.

The only issue arises for consideration is with regard to disallowance of remuneration paid to partners.

Sh. Saroj Kumar Parida, the Ld.counsel for the assessee, submitted that the assessee has paid `4,60,000/- towards partners remuneration. As per the partnership deed, the remuneration was `3,60,000/-. Referring to supplementary partnership deed, the Ld.counsel submitted that the remuneration payable to partners was amended and the assessee-firm is liable to pay remuneration to each partner at `34,175/- per month. Inspite of this amended partnership deed, according to the Ld. counsel, the CIT(Appeals) confirmed the order of the Assessing Officer. Referring to the observation made by the CIT(Appeals), more particularly at para 8.4, the Ld.counsel submitted that the CIT(Appeals) disbelieved the supplementary deed on the ground that it was executed on 01.04.2009 and the stamp paper was dated 03.04.2009. According to the Ld. counsel, it is only a typographical error, therefore, the CIT(Appeals) is not justified in disallowing the claim of the assessee.

On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the partnership deed enables the partnership firm to pay a sum of `3,60,000/- towards remuneration to partners, which was in fact allowed by the Assessing Officer. The assessee, however, paid `8,20,000/-. In other words, the assessee has paid `4,60,000/- over and above `3,60,000/-. The Assessing Officer has added this amount of `4,60,000/- to the total income of the assessee. The main claim of the assessee, according to the Ld. D.R., was that the partnership deed was amended by a supplementary deed. Referring to the order of the CIT(Appeals), more particularly para 8.4, the Ld. D.R. submitted that the supplementary deed was executed on 01.04.2009, whereas, the stamp paper itself was purchased on 03.04.2009. This shows that the assessee has created the document for the purpose of making a false claim before the income-tax authorities. This false document submitted by the assessee for the purpose of making false claim to the extent of `4,60,000/- cannot be a basis for granting relief to the assessee. If the intention of the assessee is really to pay more remuneration to the partners, the partnership deed would have been amended by executing an absolute deed in a manner known to law.

We have considered the rival submissions on either side and perused the relevant material available on record. The original partnership deed enables the payment of `3,60,000/- towards partners remuneration. In fact, the assessee has paid `4,60,000/- over and above `3,60,000/-. The assessee has now produced a copy of the so-called supplementary deed which said to be enable the assessee-firm for payment of `34,175/- per month. We have carefully gone through the copy of the so-called supplementary partnership deed. The stamp paper was dated 03.04.2009 and the document was executed on 01.04.2009, as rightly observed by the CIT(Appeals). In other words, the stamp paper came into existence only on 03.04.2009, whereas the document appears to have been executed on 01.04.2009. The Ld.counsel for the assessee now claims that it is only a typographical error. This Tribunal is unable to accept the submission of the Ld.counsel for the assessee. This is apparently a document created for the purpose of making false claiming before the lower authorities. After the Assessing Officer disallowed the claim of the assessee by referring to original partnership deed, the assessee created this document to support the false claim. It is not a mere typographical error as contended by the Ld.counsel for the assessee. Hence, the so-called supplementary deed cannot be acted upon. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the assessee is dismissed.