TaxTMI 
TaxTMI 
2023 (1) TMI 264
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....t' hereinafter) dated 21/04/2017. 2. The brief facts of the case are that the assessee, a partnership firm, filed it's return of income for the relevant year on 17/10/2016 at an income of Rs. 709.60 lacs, which was processed u/s. 143(1) of the Act at an income of Rs. 899.07 lacs. The difference, i.e., Rs. 189.47 lacs, as detailed in the annexure (copy on record) accompanying the Intimation (copy on record), was in respect of partner's remuneration. The assessee, in appeal, explained that one of the partners, Shri Sanjay Pathak s/o Sh. Satyendra Pathak, who was the only working partner in the firm at the time (PB pgs. 44-48), retired w.e.f. 25/8/2015, vide deed dated 26/8/2015 (PB pgs.32-34). His remuneration was, accordingly, provided by t....
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....that no remuneration is exigible to the working partner for P1 as he had not worked for the entire year. We find no merit in the Revenue's claim, by which logic, even no remuneration for P2, claimed at Rs. 2.10 lacs, also ought to have been allowed! The relevant clause of the partnership deed reads as under:- 2. Remuneration to Partners That is agreed by or between the existing partner that the party of the first part Shri Sanjay Pathak shall be the working partner and he will devote his full time and attention in the conduct of the affairs of the partnership business as per need of the business. Remuneration shall be paid to the working partners profit ratio to be worked out as under: (1) In case book profit is negative Rs. 1,50,000 ....
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....issolution, preparation of two profit & loss accounts was not required, and does not have the sanction of law. A consolidated profit & loss account for the year was required to be prepared, which profit or loss is to be then appropriated amongst the partners, including remuneration as well as interest payable thereto, which is only their business income assessable u/s. 28(v), in terms of the partnership deed. Reference in this context be made to the decision in CIT v. Ashokbhai Chimanbhai [1965] 56 ITR 42 (SC), wherein it stands explained that profits do not accrue from day to day or even from month to month, and have to be ascertained by a comparison of assets at two stated points. Unless the right to profit comes into existence, there is ....