TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 118
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....ome of approximately Rs.77 lacs. The case was selected for scrutiny and the assessment was completed u/s 143(3) of the IT Act pursuant to survey conducted u/s 133A of the Act on 13- 02-2008. During the course of survey, a statement was recorded u/s 133 of the Act. One of the partners of the firm admitted that the assessee firm had unaccounted income of Rs.65 lacks over and above the regular business profits shown in the books of accounts. However, in the return of income filed by the assessee firm this amount of Rs.65 lacs was not separately shown as "undisclosed income declared during the course of survey" instead shown as profits earned during the year and correspondingly declared huge expenditure of Rs.52,25,613/- under the head "partner....
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....pon by the learned AO deleted the addition with the following observations: "3. I have gone through the facts of the case. I find that the decision in the case of Fakir Mohd Haji Hasan 247 ITR 290 (Guj.), relied upon by the A. O. to hold that income under the deeming provisions do not fall under any head of income was disapproved by the same Court in their subsequent decision in the case of Radhe Developers India Ltd. 329 ITR 1 (Guj.) and it was held that the Act does not envisage taxing any income under any head not specified in Section 14. The reasonability or otherwise of partners remuneration is decided by specific provisions of Section 40(b). In the statement of the appellant, the income was disclosed as arising out of the business an....
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.... learned AR relied upon the order of the learned CIT(A) and further placed on record the orders of the ITAT, Ahmedabad Benches in ITA No. 556/Ahd/2008 dated 05-06-2009 in the case of M/s. Arihant Enterprise Vs DCIT, Cir-3, Surat and ITA No.1901/Ahd/2009 dated 25-09-2009 in the case of Shree Khodiyar Corporation Vs ACIT, Cir-3, Surat wherein it was held that the Assessing Officer does not have any power to go into the question of reasonableness of remuneration paid to a working partner while examining as to whether or not the remuneration paid exceeds the limits prescribed in section 40 (b) of the Act. 5. We have heard the rival submissions and perused the materials on record. The facts of the case are that one of the partners of the appell....
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....e not inclined to accept this conclusion of the ld. CIT(A) since the partner of the firm clearly stated in his statement during the course of survey that the amount of undisclosed income of Rs.65 lacs has been generated on account of extra work done by the firm, over and above the specification given for the construction of row houses and onmoney received on sale of plots while booking the row house and sale of land on behalf of the landlord. There is no material before us controverting the averments in the said statement. Once the amount has been assessed as business income, remuneration admissible to partners in terms of the partnership deed has to be allowed in accordance with and within the limits stipulated under the provisions of sec.....
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....901/Ahd/2009 dated 25-09-2009 - Shree Khodiyar Corporation Vs ACIT, Cir-3, Surat ITAT Ahmedabad "D" Bench on an identical issue held as under: "3. In further appeal before us, the assessee has placed reliance on the order of the Ahmedabad "D" Bench in ITA No.556/AHD/2008 (AY 2004-05), dated 5-6-2009 in the case of M/s. Arihant Enterprise, Surat Vs DCIT to contend that the view taken by the income-tax authorities is wrong. From the copy of the order placed before us, we find that in Paragraph 7.2 of the order the Tribunal has considered the issue. The Tribunal has referred to the judgment of the Hon'ble Gujarat High Court in Yoganand Textiles (2002 ITR 869) and the earlier order of the Ahmedabad Bench in the case of Chhajed Steel Corporatio....