Partners' remuneration ceiling under section 40(b): interest credited to profit and loss account was not excluded, and the appeal failed.

Interest income from fixed deposits, having been credited to the profit and loss account and accepted as business income in assessment, was not required to be excluded for computing the ceiling on partners' remuneration under section 40(b) of the Income-tax Act, 1961. On those facts, the Court found no substantial question of law arising from the Revenue's challenge and declined to enter the broader controversy on whether only business income should be considered for book profit. The appeal was dismissed, leaving the Tribunal's view undisturbed.

---

---

Issues: Whether interest income credited to the profit and loss account was required to be excluded while computing the ceiling on deduction for partners' remuneration under section 40(b) of the Income-tax Act, 1961.

Analysis: The income from fixed deposits had been credited to the profit and loss account and treated as business income in the assessment. In those circumstances, the Court held that the Revenue's challenge did not give rise to a question of law warranting interference, and it declined to decide the wider controversy on whether only business income would be relevant for working out the book profit ceiling.

Conclusion: The interest income was not excluded for the purpose of the present appeal, and the Revenue's challenge failed.

Final Conclusion: The appeal was dismissed, leaving undisturbed the Tribunal's view on the assessee's claim for deduction of partners' remuneration on the basis of the profit shown in the accounts.

Ratio Decidendi: Where the interest income is credited to the profit and loss account and accepted as business income in assessment, no substantial question of law arises on its exclusion from book profit for computing the ceiling under section 40(b).

---