Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S. The Asian Marketing, Cc

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.275/2010 J U D G M E N T Commissioner of Income Tax, Jaipur-II, Jaipur vs. M/s. The Asian Marketing, CC-208, Gole Market, JawaharNagar, Jaipur. DATE : 11th April, 2012 'HONBLE MR. JUSTICE NARENDRA KUMAR JAIN-IHON'BLE DR. JUSTICE MRS. MEENA V. GOMBER Mr.R.B. Mathur, for appellant. Heard learned counsel for appellant. 2.The remuneration, payable to partners, was disallowedby Assessing Officer, however, on an appeal, the AppellateAuthority set aside the order of Assessing Officer. The order ofAppellate Authority i.e. Commissioner of Income Tax(Appeals)-II, Jaipur, has been affirmed by the Income TaxAppellate Tribunal, Jaipur Bench 'B', Jaipur. The finding ofTribunal reads as under :- “4. We have heard the ld. DR and considered thewritten submission filed by the ld. AR . Section 40(b)(v) specifies that remuneration is to be authorizedby partnership deed to a working parter. Theworking partner has been defined in explanation 4opportunity Section 40(b). It is not disputed thatremuneration paid is to the working partners. Clause8 of the partnership deed relates to the entitlementof remuneration to the to the partners. The relevantclause is reproduced as under :- “8. That both the parties, that is, the partyof the First Part and the party of theSecond Part will be actively engaged in thebusiness of th epsf and wil be the workingpartners and as working partners will beentitled for remuneration / salary whichwill be paid to them according to thestandards and norms fixed by the relevantprovisons of the Income Tax Act, 1961.The remuneration/ salary so admissiblewill be paid / credited to their accountprovided that such remuneration / salarycan be increased / decreased as per mutual agreement as the partnersmutually decide to be adjusted at the endof the year as per the relevant of theIncome-tax Act, 1961. The excess amountso paid/credited, if any, would be debited /credited to their capital account.'' This partnership deed has authorized theremuneration to be payable to the partner. The onlydispute by the Revenue is that the amount ofremuneration has not been quantified in thepartnership deed. It is mentioned in clause 8 of thepartnership deed that remuneration will be payableas per norms fixed by the relevant provisions of theIncome-tax Act. Thus the quantification of theremuneration is apparent from the clause 8 of thepartnership deed. The requirement in law is thatremuneration should have been authorized and theamount of remuneration shall not exceed theamount as mentioned in sub-clause (v) of Section 40(b) of the Act. The relevant provisions has used theword 'authorised' and not the word used 'quantify'.The ITAT Pune Bench in the case of ACIT Vs. SumanConstruction 43 SOT 495 held that remuneration isto be deducted in case partnership deed authorizesthe payment of salary. We have also considered thedecisions which have been mentioned by the ld. CIT(A) in his order. We, therefore, feel that the ld. CIT(A) was justified in allowing the remunerationpayable to the partners. Before parting with thisappeal, we would like to state that the remunerationreceivable by the partners is taxable in their handsand it is not the case of the Revenue that theassessee has claimed remuneration to the workingpartners to avoid tax. It is true that tax payable inthe hands of the individual may be 30% whileinterest in the hands of the firm may be 35%. Thustax effect is not substantial. Hence, Ground No.1 and2 of the Revenue are dismissed.” 3.The question of payment of remuneration is a questionof fact and finding in this regard is based on clause 8 of thepartnership deed. Clause 8 was also quoted and considered inthe order of Tribunal. Therefore finding in this regard is afinding of fact. There is a concurrent finding of fact recordedby Appellate Authority as well as Appellate Tribunal, whichcannot be interfered with by this Court. 4.After considering submissions of learned counsel forappellant and the finding of the learned Tribunal, we are of theview that no substantial question of law is involved in the present appeal. There is a concurrent finding of fact by boththe Courts below based on relevant clause of partnership deeditself. Since, no substantial question of law is involved, hence,appeal is dismissed in limine. (DR. MEENA V. GOMBER), J. (NARENDRA KUMAR JAIN-I),J. Sanjay, SNo.39 “All corrections made in the judgment/order have beenincorporated in the judgment/order being emailed.” Sanjay Solanki JUNIOR PERSONAL ASSISTANT.