AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 628
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....enue. 3. Ground No. 1 raised by the revenue is in respect of restriction of addition of net profit by the Ld. CIT(A). During the course of assessment proceedings, the assessee claimed total profit of Rs. 32,33,563/-. The A.O. examining the profit and loss account in respect of Djibouti Project found that the credit entries aggregating to a sum of RS. 9,29,48,245/- and estimated the profit at 7% of this aggregate. The A.O. added the difference of profit i.e. (Rs. 55,76,895/- - Rs. 32,33,563/-) Rs. 23,43,322/- to the total income of the assessee. 4. The Ld. CIT(A) considered the submissions of the assessee in respect of allowing the deduction of Rs. 16,85,940/- being a salary paid to partners of the assessee by placing reliance on the d....
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....umstances therein in view of the amendment to statutory provisions of section 40(b) of the Act w.e.f. 1993-94. The relevant portion of which is reproduced herein below: "8. The next contention is with reference to allowance of interest on partners' capitals and partners' remuneration. Assessee has claimed an amount of Rs. 4,95,401/- as interest on partners' capitals and Rs. 84,000/- as remuneration to the partners and arrived at net profit of Rs. 8,87,273/-. Due to variation in the depreciation claims etc., the income offered by assessee as can be seen from the assessment order was at Rs. 6,36,055/-. One of the deductions allowed by the CIT(A) is with reference to remuneration and interest to the partners which was contested by the....
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.... salary, commission or remuneration paid to partners are to be reduced from the gross income of the partnersip firm. The balance is divided among the partners in their profit sharing ratio, the amounts paid to partners i.e. interest salary, bonus, commission or remuneration are added to the income of the individual partner. The profits distributed were assessed in the assessment of the partners. However, the provisions with regard to the assessment of partnership firms have undergone change from 01.04.1993 i.e. for the A.Y. 1993-94 onwards. Now, all firms are uniformly assessable as firms only and there is no difference in tax rates. The profit derived from the partnership firm is exempt in the assessment of the partners as the same is bein....
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....risdictional High Court had no occasion to consider the provisions of section 44AD as it is applicable for the assessment year under consideration and as it would be applicable with effect from 1.4.2011. In view of the provisions of section 44AD as it is applicable for the assessment year under consideration and the amendment made with effect from 1.4.2011 it is obvious that the legislature intended to allow the interest and salary separately from the estimated income. Therefore, the judgement of the jurisdictional High Court in the case of Indwell Construction (supra) may not be of any assistance to the revenue in this case. Accordingly, we direct the Assessing Officer to allow the salary and interest paid to the partner subject to the lim....
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.... of the Act expressly excludes the benefit of statutory deductions to such an assessee. If the interpretation given by the revenue is accepted, it would mean that in a case where the assessee's books of account have been rejected or for any other reasons, whatsoever, best judgment assessment has been made that would entail penalty or adverse civil consequences of depriving the assessee from having the statutory deductions, which would have been otherwise available to him in case his voluntary return filed under section 139(1) has been accepted or regular proceedings under section 143(3) were taken. This interpretation would lead to an anomalous situation, besides the same does not flow from the scheme of assessment under the Act. It is only....
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....y in the order of CIT(A). Thus ground no 1 raised by the revenue fails and dismissed. 9. Ground No. 2 is regarding the deletion of addition made on account of payment of EPF beyond specified due date. The AO added an amount of Rs. 1,30,475/- for non-payment of employees contribution to the account of Government within due date. The CIT(A) considering the submissions of the assessee restricted the addition, upto Rs. 20,498/- and allowed the remaining portion of the addition on being satisfied the said contribution was paid before the due date of filing of the return of income in terms of the decision of the Hon'ble Supreme Court in the case of Alom Extrusion Ltd. reported in 319 ITR 306 (SC), We find the CIT(A) rightly restricted the addi....