Thursday 3 May 2012

S. 40(b)(v): Partnership deed need not quantify partner’s remuneration

CIT vs. M/s. The Asian Marketing (Rajasthan High Court)


The assessee’s partnership deed provided that the partners would be paid remuneration / salary “according to the standards and norms fixed by the relevant provisions of the Income Tax Act, 1961”. The AO disallowed the claim for deduction of the salary paid to the partners u/s 40(b)(v) on the ground that as the deed did not quantify the amount of remuneration. This was reversed by the CIT (A) and Tribunal. On appeal by the department, HELD dismissing the appeal:

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