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TMI Blog1984 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... K.M.Kannan and Sri K.M. Sethuraman are partners representing their respective HUF in the firms (1) M/s Sethuram weaving Mills, Madurai, (2) M/s Rani Rolling Mills. Madurai and (3)M/s Rani foundry, Madurai, The respective HUF debited its accounts by Rs. 6000 p.a. and credited the amount to the individual account of the Karta and claimed deduction thereof from the total income. The HUFs carry on money lending business, besides being, partner in the above three firms which carry on manufacturing business in power-loom cloth, aluminium circles and vessels and rice mill, flour mill parts, electric motor pump-set etc, The ITO Following the decision of the Tribunal, Madras C bench in the case of S. Janakarajan vs. ITO-I (1),Dindigul held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sively for the purpose of business. In support of his proposition, he relied on the decision of the Supreme Court in the case of Jugal Kishore Baldeo Sahi vs. CIT reported in (1967) 63 ITR 238 (SC) wherein the remuneration paid to the Karta under valid agreement for services rendered to the family business and looking after the interest of the family in other partnership business and looking after the interest of the family in other partnership business was held deductible u/s 10(2) (xv) of the IT Act, 1922, He has also relied on the decision of the Madras High Court in (1970) 75 ITR 109 (Mad) CIT vs. S.A.P. Annamalai wherein it has been held that the remuneration paid to the Karta of the HUF who is carrying on the business of the family is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the partnership business, the remuneration was legitimately allowable as a deduction. 5. The ld. Departmental representative on the other hand supported the orders of the authorities. 6. We have duly considered the rival contentions urged on behalf of the parties. In the instant cases, the Karta not only looked after the families own money lending business, but also the partnership business on behalf of the families. The Supreme Court in the case of CIT vs. Ramniklal Kothari (1969) 74 ITR 57 (SC) has observed that the business carried on by the firm is the business carried on by the partners and as the Kartas in the instant case represented the respective HUF it can be said that the respective HUF carried on the partnership business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minor son and possibly there could not be any valid agreement between them, inasmuch as, the minor has no contracting ability. Nonetheless, the salary debited in the family business Tamil Magazine by name "Kumudham" has been held deductible in computing the income of HUF. Further, the existence of the agreement could be inferred from the conduct of the parties. The ld. representative of the assessee furnished ledger copies of the accounts of the HUF which show the debit of salary in the HUF account and credit of the same in the individual account of the Kartas. This collateral evidence can be taken as evidence of agreement for payment of salary by the HUF s to the respective Kartas. Even, the Allahabad High Court has held in the case of Rag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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