TaxTMI 
TaxTMI 
2006 (4) TMI 49
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....llegal in this case. However, before us learned counsel for the assessee submitted that he is not pressing the ground. Hence, this ground is dismissed as not pressed. 3 The next common ground raised is that the learned Commissioner of Income-tax (Appeals) erred in holding that the provisions of section 44AF applies to the facts of the case. The Commissioner of Income-tax (Appeals) fundamentally failed to appreciate that the provisions of section 44AF is a special provision and applies only in the case of the retail business and factually the assessee had been carrying wholesale business and accordingly the Assessing Officer ought to have applied the correct provisions of law in the light of the mandate provided in article 265 of the Cons....
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....revious year on account of such business or, as the case may be, a sum higher than the aforesaid sum as declared by the assessee in his return of income shall be deemed to be the profits and gains of such business chargeable to tax under the head 'Profits and gains of business or profession' Provided that nothing contained in this sub-section shall apply in respect of an assessee whose total turnover exceeds an amount of forty lakh rupees in the previous year. (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed: Provided that where the assessee is a firm, the s....
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....ection 44AF will obviously not be applicable in the case of the assessee. The assessment should be done as per the sanguine provisions of law as applicable to the facts of the case. It is neither open for the assessee nor for the Revenue to opt for a particular section of their choice for taxation of a particular item irrespective of its applicability to the facts of the case. Since this aspect has not been examined by the lower authorities, we, in the interest of justice, remit this issue to the files of the Assessing Officer to give a finding in this regard. The assessee should be given adequate opportunity of being heard. 7 The next common issue raised is that the learned Commissioner of Income-tax (Appeals) fundamentally failed to ap....
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....e accounts of the partners. Thus, there is no payment of remuneration in excess of Rs. 48,000 even on accrual basis. As per clause 9 of the partnership deed, which is extracted in paragraph 4 of this order, the salary to working partners is to be decided by mutual understanding in case there was no sufficient profit. In this case, the book profit before allowing salary to partners was only Rs. 64,823 (Rs. 16,820 + Rs. 48,000). Thus, there was no profit for payment of salary to the extent of Rs. 5,000 per month to each working partner. Thus, the partners have mutually agreed to pay salary at the rate of Rs. 2,000 per month to each working partner in accordance with clause 9 of the partnership deed. The assessee is, therefore, entitled to cla....
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....on to any payment under this clause to the partner during the previous year relevant to the assessment year commencing on April 1, 1993, the terms of the partnership deed may, at any time during the said previous year, provide for such payment." 11 From the above, it is evident that the sanguine provisions of the Act mandate the allowance of amount actually paid/provided iii the accounts as per the terms of partnership deed. The assessee may have a case that clause 9 of the partnership deed permitted the payment of the amount as contended by the assessee, but when the assessee is neither paying nor making provision to the extent permissible under the partnership deed, it is implied that the partners have agreed to take a sum which is low....