TaxTMI 
TaxTMI 
2015 (8) TMI 855
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.... appeal is whether the ITAT was correct in law in deleting the addition of Rs. 6,05,91,909 made by the Assessing Officer ("AO") to the income of the Respondent Assessee firm on the ground that the remuneration paid to the partners of the Respondent Assessee firm was not in accordance with the provision of Section 40(b)(v) of the Act. 3. The Respondent Assessee firm was initially constituted with Smt. Manju Vaish, Smt. Kali Vohra and Mr. Vinay Vaish and was carrying on the profession of law in New Delhi and Mumbai. With effect from 1st April 2006, Smt. Manju Vaish and Smt. Kali Vohra retired from the partnership and Mr. Ajay Vohra and Mr. Bomi F. Daruwala joined the partnership. A fresh retirement-cum-partnership deed was executed on 22nd....
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....ssessee explained to the AO that in terms of the Section 40(b)(v) of the Act, the Assessee had paid 40% of the net profits in the ratio of partners" share of profit to the partners respectively as salary. The AO concluded that since the partnership deed "neither specified the amount of salary to be paid to each of the working partners nor has laid down a specific method of computation thereof" and has only mentioned "allocable profit" which has not been defined in the partnership deed, Section 40(b)(v) of the Act would not apply. Consequently, the remuneration to the partners, not being in terms of Section 40(b)(v) of the Act, was disallowed. 7. The CIT (A) by the order dated 4th January 2013 upheld the order of the AO. In the impugned o....
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.... additionally notes that under Section 28(v) of the Act, any salary or remuneration by whatever name called received by partners of a firm would be chargeable to tax under the head profits and gains of business or profession. The proviso to Section 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted to the extent of the amount not so allowed to be deducted. Further Section 155 (1A) of the Act states that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with a view....
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....ecognised under Section 80 G of the Act, 50% was allowed to be deducted and 50% was added back to the income of the Assessee. The CIT (A) upheld the order of the AO. 12. In the impugned order, the ITAT has accepted the explanation of the Assessee that the IFA was a professional body and a non-profit organisation engaged in the study of international tax laws and policies. It, inter alia, undertakes research, holds conferences and publishes materials for the use of its members. Mr. Ajay Vohra, one of the partners of the Assessee firm, was also a member of the executive body of the IFA. In the facts and circumstances, the contribution made by the Assessee to the IFA was held to be for inter alia creating greater awareness of the Assessee f....