DELOITTEE HASKINS with 21 Partners- Can an AOP be act as Practicing Chartered Accountants.

-----Original Message-----
From: "CA AMRESH VASHISHT,MODERATOR"
Sent: 09/07/2013, 6:27 PM
To: "ICAI_CIRC_MEERUT_CA@yahoogroups.com"
Subject: {Amresh's CA's} DELOITTEE HASKINS with 21 Partners- Can an AOP be act as Practicing Chartered Accountants.


The A.O may not be aware that that there are SEVEN DELOITTEE HASKINS & SELLS ,CA FIRMS.

*The output is sorted on Firm Name and Head Office City
Firm Registration No. Firm Name Head Office City Constitution Type Region
117365W DELOITTE HASKINS & SELLS AHMEDABAD PARTNERSHIP WEST
008072S DELOITTE HASKINS & SELLS CHENNAI PARTNERSHIP SOUTH
015125N DELOITTE HASKINS & SELLS GURGAON PARTNERSHIP NORTH
302009E DELOITTE HASKINS & SELLS KOLKATA PARTNERSHIP EAST
118304W DELOITTE HASKINS & SELLS MUMBAI PARTNERSHIP WEST
117366W DELOITTE HASKINS & SELLS MUMBAI PARTNERSHIP WEST
117364W DELOITTE HASKINS & SELLS VADODARA PARTNERSHIP WEST

M/s Deloitte Haskins & Sells vs. DCIT (ITAT Chennai)
July 9th, 2013
(108.2 KiB, 346 DLs)

S. 40(b): Appointment of an existing partner as representative partner
for another party may circumvent the ceiling on number of partners


The assessee, a firm of Chartered Accountants, filed a return
offering income of Rs. 17.70 crores which was accepted by the AO u/s
143(3). The CIT then passed an order u/s 263 stating that the assessee
had amended its partnership deed pursuant to which Mr. Mukund
Dharmadhikari, who was already a partner of the firm, was added once
again as a partner in a representative capacity, to represent Deloitte
Haskins & Sells, Mumbai. As Mr. Dharmadhikari had the right to share profit, both in the representative capacity as well as in his
individual capacity, the CIT held that the number of partners exceeded
20, the maximum allowed under the Partnership Act, 1932, and that the
assessee had, therefore, to be treated as an Association of Persons. He
held that the assessee was not entitled to claim a deduction u/s 40(b)
for the salaries paid to its' partners.On appeal by the assessee to the
Tribunal HELD:

A study of the partnership deed shows that Deloitte
Haskins & Sells, Mumbai, which is the participating firm, is not a
stranger to the assessee. The assessee can take policy decisions, which
have a policy bearing on such firm, once there is an approval of the
majority of the members of the "National Firm". Mukund Dharmadhikari was representing Deloitte Haskins & Sells, Mumbai, and the endeavour of the assessee was to bring on board the participating firm, on which it
had powers to make policy decision, so that they became entitled for a
share of profit. In other words, the effort of the assessee was to bring indirectly into the partnership M/s Deloitte Haskins & Sells,
Mumbai, which was already a participating firm. The assessee was a
renowned partnership firm and was well aware that number of partners
cannot exceed 20. It is a well settled principle of law that what is
permissible is tax planning, but not evasion. When an attempt is made by a concern to evade tax using subtle camouflages, bounden duty of the
authorities is to find out the real intention. It is the duty of the
Court in every case, where ingenuity is expended to avoid taxing and
welfare legislations, to get behind the smoke screen and discover the
true state of affairs. The Court has to go into substance and not to be
satisfied with the form. Though in Rashik Lal 229 ITR 458 (SC) & Bagyalakshmi 55 ITR 660 (SC) it was held that a partner may be a trustee or may
enter into a sub-partnership with others, or can be a representative of a group of persons and that qua the partnership, he functions in his
personal capacity, these decisions will not apply since the assessee was indirectly trying to bring in M/s Deloitte Haskins & Sells, Mumbai, another firm, which was already a participating firm, as its partner,
circumventing the limit of maximum 20 members. The AO did not apply his
mind and go into these aspects and so the CIT was justified in directing him to look into the issue.

>
>Related Judgements
> 1. ACIT vs. M/s. Khanna & Annadhanam (ITAT Delhi) S. 271(1)(c) imposes "strict civil liability". It is not understandable
how a CA firm can have any doubt about the receipt being clearly a
professional receipt. If it is so, it is not understandable how the
assessee can discharge its role as a professional consultant. It is
unimaginable that…
> 2. Dharmasingh Popat vs. ACIT (ITAT Mumbai) Though in general law, a firm and its partners are not distinct, this is
subject to statutory exceptions. Under the scheme of assessment of firms applicable from AY. 1993-94 a firm is treated as an independent entity
and the expenditure by way of remuneration, interest, commission etc.
paid to…
> 3. Vishnu Anant Mahajan vs. ACIT (ITAT Ahmedabad Special Bench) Though a firm and its partners are not different entities in general law,
under the Act, they are treated as separate entities. The salary and
interest paid by the firm to the partners is deductible in the hands of
the firm and taxable in the hands of the partners…