The Pune bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication on the Intimation order passed under section 154 of the Income Tax Act,1961 for disallowing the payment of remuneration to partners.
Mayur Wines, the appellant assessee was a partnership firm engaged in the business of liquor. The assessee filed a return of income and against that, an intimation under section 154 of the Income Tax Act was issued disallowing the remuneration paid to the partners on receipt of the information a rectification application was filed by the assessee and the same came to be rejected.
Thus the assessee appealed against the order passed by the National Faceless Appeal Centre( NFAC) confirmed the action of the Central processing unit, Bangaluru on the ground that the appellant had failed to upload the partnership deed.
Sanket M Joshi, the counsel for the assessee contended that the central processing unit, Bangaluru had disallowed the remuneration to the partners merely on the ground that the return of income was not accompanied by the partnership deed and ought not to have disallowed the partner’s remunerations while processing the return of income under section 143(1)(a) of the Income Tax Act.
It was also submitted that the intimation order passed under section 154 of the Income Tax Act was not as per the law and is liable to be deleted.
Ramnath P. Murkunde, the counsel for the revenue strongly opposed the contentions made by the assessee and submitted that the intimidation order passed under section 154 of the Income Tax Act was as per the law.
The two-member bench comprising S. S. Godara ( Judicial )And Induri Rama Rao (Accountant)held that to allow the claim for deduction of the partner’s remuneration, the return of income should be accompanied by the partnership deed and in the absence of such requirement under law, this cannot be treated as an incorrect claim.
It was also directed to the re-adjudicate to amend the intimation by deleting the addition on account of the partner’s remuneration while allowing the appeal filed by the assessee.
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