Survey disclosure treated as business income when linked to business assets, supporting book profit and partners' remuneration.

Income disclosed during survey under sections 69 and 69A is deemed income of the relevant year, but it does not form a separate head of income; it must still be classified under section 14. Where excess cash, stock and receivables are found at the business premises and no source other than the business is shown, the surrendered amount can be treated as business income. If that amount is credited to the profit and loss account, it enters book profit computed under Chapter IV-D and can support partners' remuneration under section 40(b).

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Issues: Whether the income disclosed during survey under sections 69 and 69A of the Income-tax Act, 1961, and credited to the profit and loss account, could be treated as business income forming part of book profit for the purpose of partners' remuneration under section 40(b).

Analysis: Sections 69 and 69A deem unexplained investments or money as income of the relevant year, but they do not create a separate head of income. Read with section 14, such income must still be classified under one of the recognised heads. Where the survey was conducted at the business premises and the excess cash, stock and receivables were found in the course of the assessee's business, and no independent source was shown apart from the business itself, the income could legitimately be treated as business income. Since the surrendered amount was entered in the profit and loss account, it formed part of the net profit computed for Chapter IV-D purposes.

Conclusion: The surrendered income was rightly to be treated as business income and included in book profit, so partners' remuneration under section 40(b) was allowable in favour of the assessee.

Ratio Decidendi: Income deemed under sections 69 and 69A does not escape classification under the heads of income in section 14, and where the source and destination of the funds are both the assessee's business, the amount forms part of business income and book profit for section 40(b).

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