2022 (12) TMI 1225

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....see as the appellant under Section 260A of the Income Tax Act, 1961 (briefly 'the Act' hereinafter) against the order dated 22.11.2005 passed by the Income Tax Appellate Tribunal, Bench 'B', Hyderabad (briefly 'the Tribunal' hereinafter) in I.T.A.No.992/Hyd/2004 for the assessment year 2001-2002. 3. From the docket proceedings we find that vide the order dated 04.09.2006, the appeal was admitted for hearing but no substantial question of law was framed. However, from the memo of appeal, we find that the following question has been proposed as a substantial question of law: "Whether the Income Tax Appellate Tribunal 'B' Bench, Hyderabad was legally correct in holding that the requirements of the provisions of Section 40(b)(v) of ....

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....(briefly 'CIT(A)' hereinafter). By the appellate order dated 03.08.2004, CIT(A) dismissed the appeal of the appellant and affirmed the disallowance made by the assessing officer. 8. It was thereafter that appellant filed further appeal before the Tribunal. Tribunal vide the order dated 22.11.2005 held that payment made to the partners amounting to Rs.1,08,000.00 is not an allowable deduction under Section 40(b)(v) of the Act. Therefore, the appeal was dismissed. 9. Before we advert to the order of the Tribunal, we may refer to Section 40 of the Act which deals with amounts not deductible. Section 40 says that notwithstanding anything to the contrary in Sections 30 to 38, the amounts mentioned thereafter shall not be deducted in comput....

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....eal, Tribunal held as follows: Before us, the assessee has put forth the same contention whereas learned DR has claimed that the provision of Section 40(b) of the Act is very clear and the circular issued by the Board is in consonance with the above provision. We find merit in the case made out by the revenue in so far as the provision of the Act is very clear with reference to payment of remuneration to the working partners in case of a firm. It clearly states that the payment has to be authorized by the partnership deed and the same has to be in accordance with the terms of the partnership deed. In the impugned Partnership deed no terms for payment to the working partners have been stipulated. In this view of the matter, we hold ....