TaxTMI 
TaxTMI 
2019 (2) TMI 512
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.... gains of business/profession, in accordance with the provision of explanation 3 below section 40(b)(v) of the Act 2. Whether on the facts and circumstances of the case and in law justified in directing the A.O. to consider these incomes for the purpose of computation of book profit, without appreciating that interest income not forming part of business/profession and shed rent are not included in the definition of business income, as defined in clause (i) to (vii) of section 28 of the Act. 3. Whether on the facts and circumstances of the case and in law justified in directing the A.O. to consider these incomes for the purpose of computation of book profit, without appreciating that the A.O. had correctly worked out income from business/profession for computing book profit for determination of disallowance of partner's remuneration in accordance with the provision of section 29 of the Act, wherein the procedure for determination of profit & gain of business referred to in section 28 of the Act by applying the various provisions contained in section 30 to 43D of the Act has been laid down. Relief claimed in appeal. The order of the CIT(A) on the issues raised in the afor....
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....nt of interest account were also furnished by the assessee. It was contended by the assessee that without fulfilling this conditions, business cannot be run and export will not be eligible. Therefore, there are direct nexus of Bank FDR with export business and as a result, interest income earn on this Bank deposit is nothing but a business income. Therefore the income which is embedded in the net profit and shown as income in the profit and loss account of the firm can be taken into consideration for allowing deduction of remuneration to partner u/s 40(b) of the Act without excluding the interest income and that the profit so calculated shall form part of the book profit. In support of his claim, the assessee also relied upon the judgment passed by the Co-ordinate Bench. However, the contention made by the assessee was not found suitable and ultimately shed rent & interest income amounting to Rs. 2,21,28,516/- is disallowed from the computation of remuneration of the partners against which the appeal was preferred by the assessee but without success. In appeal before the Learned CIT(A), ultimately deleted such addition made by the Learned AO with the following observation: "3.1 T....
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....to be paid to partners. Thus, the issue in the current appeal is covered in favour of the appellant by this decision of jurisdictional High court. Following the same, the AO is directed to consider these incomes for the purposes of computation of book profit and accordingly the disallowance made out of remuneration to partners is directed to be deleted." Hence, the instant appeal before us. 4. At the time of hearing of the instant appeal, the Learned Counsel appearing for the assessee submitted before us that the issue is duly covered by the order passed by the Co- ordinate Bench in a similar set of facts being ITA No. 2853/Ahd/2011 for A.Y. 2008-09 copy whereof is also attached as "Exhibit-A" before us. The Learned DR, however, relied upon the order passed by the authorities below. 5. Heard the respective parties, perused the relevant materials available on record. This is a settled principle of law that the interest income for the purpose of ascertaining ceiling on the basis of book profit, the profit shall be in the profit and loss account. The interest income, thus, cannot be notionally be excluded for the purpose of determining the allowable of deduction of remuneration pa....
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....date of such partnership deed) for which such payment was not authorized by, or is not in accordance with, any earlier partnership deed, so, however, that the period of authorization for such payment by any earlier partnership deed does not cover any period prior to the date of such earlier partnership deed; or (iv) any payment of interest to any partner which is authorized by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as such amount exceeds the amount calculated at the rate of [twelve] per cent simple interest per annum; or (v) any payment of remuneration to any partner who is a working partner, which is authorized by, and is in accordance with, the terms of the partnership deed and relates to any period falling after the date of such partnership deed in so far as the amount of such payment to all the partners during the previous year exceeds the aggregate amount computed as hereunder:- (a) On the first Rs. 3,00,000 of the bookprofit or in case of a loss Rs.1,50,000/- or at the rate of 90 per cent of the book-profit, whichever is more; (b) On the balance of the book-p....