S. 40(b)(v) : Amounts not deductible – Partner – Remuneration – Supplementary deed operates retrospectively if the deed is in accordance with the law – Disallowance of remuneration was deleted. [S. 40(b)(ii)]
The AO disallowed the remuneration paid to partners on the ground that the remuneration was not paid in accordance with the original deed of partnership. The disallowance was affirmed by CIT(A) on the ground that the supplementary deed was only a self-serving document. On appeal, the Tribunal held that the assessee was entitled to modify remuneration as per the amended provision based on the supplementary deed giving effect retrospectively. Accordingly, the disallowance of remuneration of Rs 90, 27,721/ affirmed by the CIT(A) was deleted. Relied on Durgadas Devknandan v .ITO (2012) 342 ITR 17 (HP)(HC) (ITA No. 2596/Mum/2022 dt. 9-3-2023)(AY. 2018 -19)
Jetkool Exports India v. NFAC (Mum.)(Trib.) www.itatonline.org
[Coram : Hon’ble Shri Amarjit Singh, AM and Hon’ble Ms. Kavitha Rajagopal, JM]