Tribunal held, that the partnership deed contained a provision for interest on capital at 12 per cent. per annum and clause 17 provided for remuneration to whole time working partners and the method of computation of remuneration. By a supplementary deed the manner of paying remuneration to the whole time working partners had been revised. In the assessment years 2009-10 to 2011-12, the assessee had claimed interest on capital and remuneration to the partners, which was verifiable from the computation of income. The AO was directed to allow remuneration to the partners and interest on capital as per the provisions of law. Interest on the partners’ capital account and remuneration to partners was allowable as deduction even after estimation of the net profit from the gross receipts. (AY.2012-13)
Mayasheel Construction v. Dy.CIT (2020) 77 ITR 8 (SN) (Delhi) (Trib.)
S. 40(b)(iii) : Amounts not deductible-Working partner– Remuneration–Interest-Rejection of books of account and assessment adopting 8 Per cent. of gross turnover as net profit-Separate deduction towards interest on partner’s capital account and remuneration to partner is to be allowed, when net profit is estimated from gross receipts. [S. 133A]