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Issues:
1. Deduction of the Receiver's salary under section 12(2) of the Income Tax Act for the purpose of making or earning income of the estate. Analysis: 1. The case involved the Receiver and manager appointed by the High Court of Calcutta to manage the Jheria Raj estate, which generated income from mining royalties and agriculture. The Receiver claimed a deduction of his salary under section 12(2) of the Income Tax Act, which allows for expenditure solely for making or earning income. The Income-tax Officer initially allowed half of the salary as a deduction, but the Assistant Commissioner disallowed it completely, stating the Receiver was appointed to look after the parties' interests, not to earn income. The Commissioner upheld this decision, leading to the final decision by the court. 2. The court clarified that the Receiver's appointment due to litigation did not affect his position as a manager. The Receiver had to manage both the taxable mining royalties and the non-taxable agricultural income of the estate. Section 12(2) of the Income Tax Act allows for deductions of expenses incurred solely for making or earning income, excluding personal expenses. The court emphasized that even if part of the Receiver's salary was for non-income-related functions, a portion could still be deductible if it was incurred for earning income. The court illustrated this with an example of two separate managers with different salaries managing different parts of the estate. 3. The court rejected the Department's argument that the entire salary must be solely for earning income to be deductible. Instead, the court held that if any part of the Receiver's salary was attributable to earning income, it could be deducted. The court emphasized that the Receiver's salary could be split to attribute a portion to income-earning functions. The court did not determine the specific proportion deductible but left it to the appropriate tribunal to decide in the future. The court ruled in favor of the Receiver, allowing a portion of the salary as expenditure under section 12(2) and awarded costs of &8377; 200 to the Receiver. 4. Justice Sankara Balaji Dhavle concurred with the judgment, agreeing with the reasoning and decision provided by Justice Courtney Terrell.
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