In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Kolkata bench, while considering an issue of disallowance under Section 40(b)(v) of the Income Tax Act, 1961, has observed that the remuneration including bonus to the partners were duly supported by the partnership deed and therefore, the disallowance shall be re-verified.
The assessee, Mr. Anil Kumar Singh is an individual engaged in the business of contractor. Income of Rs. 27,22,745/- declared in the return of income filed on 04.01.2008. Case of the assessee selected for scrutiny and assessment u/s 143(3) of the Act was completed on 02.12.2009 at a total income of Rs. 55,35,590/-. The AO, after accepting the initial return, noticed that the assessee has claimed excess remuneration of Rs. 16,38,664/- and treating it as a mistake apparent from record, passed the order under section 154 of the Act disallowing the said claim and assessed the income at Rs. 52,98,500/-.
A bench comprising Sri Manish Borad, Accountant Member & Sri Sonjoy Sarma, Judicial Member observed that the remuneration including bonus was claimed in pursuance of Section 40(b)(v) of the Act duly supported by Partnership Deed.
Concluding the order, the Tribunal held that “we, in the interest of justice and being fair to both the parties, are of the considered view that the issue needs to be restored to ld. CIT(A). The assessee has filed various documents before us in support of its claim of bonus of Rs. 16,38,664/-. We direct the assessee to place all these documents before ld. CIT(A) who shall adjudicate the issue in light of the same and pass a speaking order in accordance with law. Needless to mention that proper opportunity of being heard should be provided to the assessee.”
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