Tribunal directs full partner remuneration & removes Drivers' Commission disallowance. The Tribunal allowed the appellant's appeal, directing the Assessing Officer to permit the full remuneration to partners and deleting the disallowance of ...
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Tribunal directs full partner remuneration & removes Drivers' Commission disallowance.
The Tribunal allowed the appellant's appeal, directing the Assessing Officer to permit the full remuneration to partners and deleting the disallowance of expenditure under the head Drivers' Commission.
Issues: 1. Disallowance of remuneration to partners 2. Disallowance of expenditure under head Drivers' Commission
Disallowance of Remuneration to Partners: The appellant, a transportation firm, challenged the disallowance of remuneration to partners amounting to Rs. 11,52,000 by the Assessing Officer. The Commissioner of Income-tax (Appeals) upheld the disallowance citing Circular No.739 of the CBDT. However, the appellant argued that the Circular was no longer applicable post an amendment in the Income Tax Act. The appellant contended that partners' remuneration should be allowed as per the resolution passed by the partners, not limited to the amount mentioned in the partnership deed. The Tribunal agreed with the appellant, directing the Assessing Officer to allow the full claim of Rs. 12 lakhs as remuneration paid to the partners.
Disallowance of Expenditure under Head Drivers' Commission: Regarding the disallowance of Rs. 63,84,528 claimed as drivers' commission, the appellant explained that this amount was a reimbursement from the contractee and not income. The Assessing Officer insisted on disallowance under Section 194H for non-deduction of TDS. The Tribunal observed that the expenditure was not incurred by the appellant as the drivers were not employed by them, and the trucks did not belong to the appellant. The Tribunal found that the amount was part of the bills raised by the contractee, not forming income for the appellant. Consequently, the Tribunal directed the deletion of the disallowance of Rs. 63,84,528.
In conclusion, the Tribunal partly allowed the appeal of the assessee, directing the Assessing Officer to allow the full remuneration to partners and deleting the disallowance of expenditure under the head Drivers' Commission.
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