Remuneration and Share Profits received from Partnership Firm are not eligible for Deduction u/s 80IB: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Pune Bench has held that remuneration and share profits received from partnership firms are not eligible for deduction u/s 80IB.

The appellant, Jaideep Sharad Kotwal, is a partner in the partnership firm, namely, M/s. Vishhram Developers. During scrutiny assessment, the Assessing Officer disallowed the deduction u/s 80IB in respect of income in the form of a share of profits, and remuneration received from the partnership firm and assessed the appellant’s total income at Rs.1,73,58,820/-. On appeal, the CIT(A) confirmed the assessment order.

Before the ITAT the counsel for the appellant submitted that the appellant was paid remuneration, the share of profits out of eligible profits of the firm which qualifies for deduction u/s 80IB, and therefore, such income in the hands of the appellant should be exempted under the provisions of section 80IB (10) of the Act.

The counsel for the revenue submitted that the remuneration and share of profits received from the partnership firm do not qualify for deduction u/s 80IB of the Act, further, the appellant did not even file the return of income within the due date prescribed u/s 139(1) of the Act before claiming deduction u/s 80IB.

The Tribunal observed that remuneration, the share of profits received from the partnership firm does not take its colour from the income out which is paid. The remuneration and share of profits received from the partnership firm are derived by the appellant based on the contractual relationship between the appellant and the partnership firm. The Tribunal further observed that the provisions of section 80IB stipulate that to claim deduction u/s 80IB, the return of income should be filed within the due date prescribed under the provisions of sub-section (1) of section 139 of the Act.

The Coram of Mr. Inturi Rama Rao, Accountant Member, and Mr. S. S. Viswanethra Ravi, Judicial Member has held that “we do not find any merit in the grounds of appeal filed by the appellant. Accordingly, the grounds of appeal raised by the appellant stand dismissed”.

Mr. Deepak Sasar and Mr. M. G. Jasnani appeared on behalf of the appellant and revenue respectively.

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