Remuneration to partners u/s 40(b) can be claimed from additional business income disclosed during survey u/s 133A:

AO disallowed remuneration paid to partners u/s 40(b). Hon’ble ITAT observed that the assessee had disclosed certain additional income during the course of survey u/s 133A as “Business income” in respect of excess stock and claimed deduction in respect of remuneration to partners on such additional business income. AO treated the said income as “Income from other sources” and consequently disallowed deduction u/s 40(b). The assessee had made disclosure in respect of excess stock as business income as was apparent from the statement recorded u/s 133A. Further, Revenue had not brought on record any evidence that the appellant had any other sources of income other than that disclosed by the assessee. It was thus held that such income was business income and qualified for the purpose of remuneration to partners.

[DCIT Vs. M/S. NEW RAMESH KIRANA STORES – ITA Nos.1891/Ahd/2010]