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| The Tax Publishers2020 TaxPub(DT) 1032 (Del-Trib) INCOME TAX ACT, 1961
Section 44AD
Even though assessee did not maintain any books of accounts and submitted its return of income under provision of section 44AD, in terms of provision of sections 184 and 185, interest and salary to partners was to be allowed.
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Presumptive taxation under section 44AD - Allowability of interest and salary paid to partners - Applicability of sections 184 and 185 -
Assessee firm was a contractor and after applying the provisions of section 44AD profit @ 8% was determined. Assessee was in appeal before Tribunal and challenged action of CIT(A) in disallowing interest and salary paid to partners. Held: Even though assessee did not maintain any books of accounts and submitted its return of income under provision of section 44AD, in terms of provision of sections 184 and 185, interest and salary to partners was to be allowed. Only thing required is that partnership should be evidenced by an instrument and the individual shares of the partners be specified in such instrument. It is also required that the interest and remuneration should be duly quantified in the instrument of partnership.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2006-07
IN THE ITAT, B-SMC DELHI BENCH
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