COMMISSIONER OF INCOME-TAX Vs. PARAS COTTON CO

JUDGEMENT

(1.) RETURN of income has been filed on October 8, 1997, vide R. No. 3183 declaring total income of Rs. 60,250 in the status of PFAS. This case has been selected for scrutiny on random sample basis by issue of notice under Section 143(2) of the Income -tax Act. In response to notice under Section 143(2) of the Income -tax Act, Shri S.C. Agarwal, advocate, and authorised representative of the assessee attended with whom case has been discussed. After discussion, returned income is accepted.

(2.) ASSESSED under Section 143(2) of the Income -tax Act. Issue necessary forms. Give credit for prepaid taxes. Bhilwara sd/. R.S. Kedawal, dated June 16, 1998, Income -tax Officer, Ward I, Bhilwara.

(3.) IT came to the notice while going through the audit by the audit party that assessee has claimed deduction of Rs. 1,27,650 from the profit of the firm was salary paid to the partners of the firm under Section 40(b)(v), such deduction can be allowed if there is an agreement to that effect in the partnership deed. As per the report, there was no partnership deed on the record of assessment proceedings. It was apprehended that this deduction is contrary to Section 40(b).