Survey-surrendered business income retains deduction eligibility; partners' remuneration under Section 40(b) was allowed.

Income surrendered during survey, when accepted and assessed as business income, retains the character of business income for computation under the Act, so regular statutory deductions cannot be denied merely because the income was not earlier recorded. On that basis, partners' remuneration under Section 40(b) was allowable on the survey-declared business income. The denial of the deduction was set aside and relief was granted to the assessee.

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Issues: Whether remuneration to partners under Section 40(b) of the Income-tax Act, 1961 is allowable on income surrendered during survey and treated as business income.

Analysis: The surrendered amount was accepted as business income. Once such income falls under the business head, the assessee is entitled to the deductions available under the Act in computing taxable income. The settled position applied was that income declared during survey does not lose its character as business income merely because it was not earlier recorded, and the assessee cannot be denied regular statutory deductions if the income is assessed under the business head.

Conclusion: The assessee was entitled to partners' remuneration under Section 40(b) on the surrendered business income.

Final Conclusion: The appeal succeeded and the denial of partners' remuneration on the survey-declared business income was set aside, with relief granted to the assessee.

Ratio Decidendi: Income surrendered during survey, when assessed as business income, retains the incidents of business income for the purpose of statutory deductions available under the Act.

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