TaxTMI 
TaxTMI 
2011 (6) TMI 855
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....(A), has erred in law in deleting the addition of Rs. 13,78,601/- and Rs. 48,000/- made on account of interest on capital and remuneration from M/s. Dynamech. 1.1. While doing so, the Ld. CIT(A), failed to appreciate that: i) AO is enabled to alter the profit or income during the assessment proceedings. ii) It is a fact that interest and remuneration had to be provided to all the partners at the rate and amount outlined in the partnership deed. If the contests of the partnership deed are bluntly ignored then sanctity of the partnership deed is eroded. No interest or remuneration has been received by the assessee in earlier years does not mean that the same cannot be brought to the tax during the year under consideration. iii) In....
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.... recomputed for the purpose of deduction u/s 80IB of the Act. The AO, therefore, held that interest on capital amounting to Rs. 13,78,601/- and remuneration of R.48,000/- was the income of the assessee and added the same to her total income. Being aggrieved, the assessee filed an appeal with the CIT(A), who allowed the appeal of the assessee. Now aggrieved with the order of the CIT(A), the assessee is in appeal before us. 4. The Ld. 'DR', relied on the order of the Assessing Officer. 5. The Ld. Counsel for the assessee, on the other hand, relied on the order of the CIT(A) and reiterated the submissions made before him. 6. We have heard both the parties and given our thoughtful consideration to the rival submissions, examined the facts of....
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....ners shall be entitled to interest on their capital @ 18% per annum or at such other rate or rates as the partners may at the end of each financial year mutually settled subject to the maximum amount admissible under the Income-tax Act, 1961. 5. Both the partners shall diligently attend to the business of the partnership and carry on the same for their greatest common advantage. Both the working partners shall be entitled to a remuneration of Rs. 48,000/- per annum each or at such other rate or rates as the partners may at the end of each financial year, mutually settle subject to the maximum amount admissible under the Income-tax Act, 1961." 9.6. The aforesaid clauses of the partnership deed are clearly enabling clauses since the wor....
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....ng the profit and gains of such an eligible profits for the purposes of deduction under this section, take the amount of profits as may be reasonably taken to have been derived therefrom. Thus sub-section has been made applicable to section 80IB by virtue of sub-section (13) of section 80IB. However, this sub-section only enables, the AO to effect the profit of the undertaking claiming deduction u/s 80IB, which is M/s. Dynamech in this case. This does not enable the AO to alter the profits or the income of the other person referred to in this sub-section. It is a fact that the assessee has not received interest and remuneration from M/s. Dynamech. As noted earlier, the terms of partnership deed are not so worded so as to make payment of int....