1994 (11) TMI 29

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....nstance of the Department, the following question was referred to this court under section 256(1) of the Incometax Act, 1961, for our opinion : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal's view that the sum of Rs. 27,323 being the total amount of the rebate allowed to the partners did not amount to commission and, therefore, cannot be disallowed under s....

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....nded that the payment of chit dividend made to the three partners of the firm cannot be disallowed under section 40(b) of the Act. However, the Commissioner of Income-tax (Appeals) agreed with the view taken by the Income-tax Officer and dismissed the appeal. Aggrieved by the order passed by the Commissioner of Income-tax (Appeals), the assessee filed an appeal before the Appellate Tribunal and th....

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.... of this case. According to learned standing counsel, the amount paid by the firm to the three partners, whether the payment is of interest, salary, bonus, commission, or remuneration, would come under the purview of section 40(b) of the Act. Learned standing counsel further submitted that inasmuch as the partners were paid commission by the partnership firm, the disallowance made by the assessing....

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....that the assessee is a partnership firm doing business in conducting chittrans actions. The three partners of the firm are subscribers in a chit transaction. After the auction was over, the firm paid the share of dividend to the subscribers who are the partners of the firm. It remains to be seen that the subscribers of the chit are entitled to get their share in the dividend income after the aucti....