Partner’s remuneration need not be quantified in Partnership deed

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

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

As reported by ITAT.ORG : The Tribunal finding that “The quantification of the remuneration was apparent from clause 8 of the partnership deed which provided that the remuneration would be payable as per norms fixed by the Income-tax Act. The requirement in law is that remuneration should have been authorized and the amount of remuneration shall not exceed the amount specified in s. 40(b)(v) which uses the word ‘authorised‘ and not the word ‘quantify‘” is a finding of fact which cannot be interfered with by this Court.

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