Relief to Deloitte: ITAT allows Deduction for Payment made to Retired Partner amount to diversion of Income at Source by Overriding Title [Read Order]
![Relief to Deloitte: ITAT allows Deduction for Payment made to Retired Partner amount to diversion of Income at Source by Overriding Title [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/08/Deloitte-ITAT-deduction-Payment-income-overriding-title-taxscan.jpeg "Relief to Deloitte: ITAT allows Deduction for Payment made to Retired Partner amount to diversion of Income at Source by Overriding Title [Read Order]")
In a significant ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) granted relief by allowing the deduction from income claimed for the payment made to a retired partner as it amounts to a diversion of income at source by overriding title. The assessee claimed for deduction amounting to Rs.1,37,75,514/- paid to retired partners, on the ground that the amount...
In a significant ruling, the Delhi bench of the Income Tax Appellate Tribunal (ITAT) granted relief by allowing the deduction from income claimed for the payment made to a retired partner as it amounts to a diversion of income at source by overriding title.
The assessee claimed for deduction amounting to Rs.1,37,75,514/- paid to retired partners, on the ground that the amount represented diversion by overriding title which was rejected by the Assessing officer; and the amount was added to the assessee’s income. CIT(A) on appeal, confirmed the aforesaid addition of Rs.1.37,75,514/.
Shri Saktijit Sey, judicial member and Shri Anadee Nath Misshra, accountant member observed in the case that payment to the partner would amount to diversion of income at source by overriding title.
It was evident that the partnership firm envisaged payment to an outgoing partner on the basis that the partner would have rendered service during his tenure as a partner of the firm but could not enjoy the fruits thereof because the work has remained incomplete, the concerned client had not been billed for the work already done.
Based on the precedent, the Tribunal viewed that payment to the partner would amount to diversion of income at source by overriding title.
Both the assessee and revenue failed to bring any distinguishing facts and circumstances or legal submissions for our consideration to persuade us to take a view different from the view taken by the Co-ordinate Bench of ITAT, Delhi in aforesaid order dated 15/01/2021 and allowed the deduction. The appeal was partly allowed for statistical purposes.
The appellant was represented by Sh. Niraj Setha, Sh. Ashesh. R. Safri & Ms Ekta Chopra and the respondent were represented by Sh. R.S. Yadav.
To Read the full text of the Order CLICK HERE
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