2005 (4) TMI 543

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....missioner of Income-tax (Appeals)-XXII at Mumbai, on August 19, 2004, and arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961. The assessee in this case, a partnership is carrying on the business of trading in electrical switches, water motors, etc. In the original return filed by the assessee-firm, there was a mistake of Rs. 61,568 relating to incentives and....

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....was not filed by the assesseefirm suo motu or voluntarily. In the first appeal the Commissioner of Income-tax (Appeals) held that the remuneration that could be claimed by a partnership firm in computing its taxable income is the remuneration debited in its books of account and nothing more. Therefore, he also confirmed the order of the assessing authority refraining to revise the remuneration att....

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.... under law. Therefore, whenever the income assessed is higher than the income returned by the assessee-firm or the assessment has been completed on higher amount of income on the basis of the revised return of income, the assessee-firm is entitled for claiming the proportionate higher amount of remuneration payable to the partners. This is a natural consequence of assessing higher amount of income....

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....ble to the partners of the assessee-firm. It is because of that inherent impossibility that the amount of remuneration debited in the books of account of the assessee-firm was less than the amount attributable to the partners as remuneration on the basis of the revised return of income filed. The disparity in the remuneration attributable to partners as per the entries in the books of account and ....