2013 (10) TMI 868

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.....2,01,620/- made u/s. 40A(2)(b) of the Act. 2. That on facts and in law, it ought to have been held that the payment of remuneration to partners was allowable in full, as prayed for. 3. The appellant craves leave to add, alter, amend any ground of appeal." 2. The brief facts are that the assessee had paid remuneration to partners amounting to Rs.7 lacs which was higher than what had been paid in the immediately preceding year. No such sum was paid upto the date of survey conducted u/s. 133A in Assessee's premises. The AO, therefore, took the view that such excess remuneration was paid to reduce the impact of the disclosure of unaccounted income of Rs.83,47,554/- made during course of survey. When asked to explain why the excess rem....

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....ness carried on by the assessee. Learned counsel for the assessee has relied upon the decision of ITAT 'C' Bench Ahmedabad in ITA No.3258/Ahd/2011, dated 18.5.2012 wherein on identical issues the learned CIT(A) has allowed the remuneration to partner u/s. 40(b) of the IT Act and the ITAT 'C' Bench Ahmedabad has dismissed the appeal of the Revenue in paragraph 8 to 13 of the order. Learned counsel also relied upon the judgment of the Hon'ble Gujarat High Court rendered in the case of DCIT Vs. Radhey Developers India as reported in 329 ITR 1 (Guj). 4. Learned DR, on the other hand, relied upon the order of the authorities below and invited our attention at page 3 and 4 of the AO's order in paragraph 4.3 wherein the AO has relied upon the d....

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....as made by the assessee on the date of survey by statement recorded. In this regard, Revenue has not controverted the said explanation of the assessee and no adverse material has been brought on record that the assessee has earned the income from any other source. In the circumstances and facts of the case, cases relied upon by the AO and the learned CIT(A) cannot help the Revenue. On identical issue, the matter has been dealt by ITAT 'C' Bench Ahmedabad in the case of DCIT Vs. M/s. Shree Labdhi Prints, dated 18.5.2012. For the sake of convenience, the decision of ITAT 'C' Bench Ahmedabad in the case of M/s. Shee Labdhi Prints in paragraph 8 to 13, is reproduced as under: "4. Subsequently the case was reopened for the reason that it was ....

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.... CIT vide order dated 22.8.2011 allowed the appeal of the Assessee by holding that when once the additional income offered for taxation during the survey is accepted and it has been explained business as the source of additional income then there is no bar in the Act from claiming partner's remuneration from such addition business income offered for taxation. 5. Aggrieved by the order of CIT(A) the Revenue is now in appeal before us. Before us the Ld. D.R. stated that the assessee firm made disclosure under the following under:- Investment in FDR 48,00,000 On money paid for Agam Row House 22,00,000 Machinery 23,79,225 Stock 4,01,580 Unrecorded cash 4,25,000 6. The assessee had offered the same as busin....