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TMI Blog1985 (7) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... xed capital of the firm, which does not bear interest. Under cl. 8 'the business of the firm shall be managed by all the partners. The firm shall be at liberty to pay such sum by way of remuneration to all or any of the partners as may be agreed upon from time to time for managing the business of the firm'. For the asst. yr. 1979-80 the assessee admitted salary receipt of Rs. 20,000 on which deduction under s. 16(1) was claimed. The ITO did not allow the deduction in the absence of employer-employee relationship between the assessee and the firm. For the reasons stated for the earlier year, the sum was assessed under the had 'business' as a protective measure. On the assessee's appeal the AAC upheld the ITO's disallowance under s. 16(1) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employment and refuse to pay salary. All the ingredients of employee-employer relationship are present in the case." The facts and arguments are similar in the present case. In a limited sense there is an employer-employee relationship between the firm and the assessee, since the salary is paid in consideration of the special services rendered by him. We are hence of the view that the remuneration in question should be assessed as salary on which the assessee will be entitled to standard deduction. The appeal is allowed. 8-12-1983 Order P.S. DHILLON, J.M.: I have gone through the order of my ld. brother, Shri C.R. Nair, and it is my misfortune that I am not able to agree with him, both in his conclusion and reasons. Therefore I st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employer and the employee and services have been rendered, when there is no evidence for the same. Moreover, whatever facts have been stated in the order prove otherwise. The Hon'ble Supreme Court on the issue in the case of V.D. Dhanwatey vs. CIT (1968) 68 ITR 365 (SC) held "that the remuneration paid by the firm to V was directly related to the investment in the partnership business from the assets of the family. There was real and sufficient connection between the investment from the jointly family funds and the remuneration paid to V. The salary paid to V was, therefore, assessable as the income of the HUF. That the finding of the Tribunal that V had earned by remuneration without detriment to the family funds was a conclusion on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year relevant for the assessment year under consideration. Therefore, there must be some material evidence to prove it and proof cannot be there if general clause in the partnership as it is there and is evident from the order of my ld. brother. There is no proof for the services rendered and service contract between the firm and the assessee (partner) representing the HUF as Karta. There is no dispute that he is there as representative of the HUF and capital share is invested by the HUF. Therefore, whatever has been earned is nothing also that the share income of the HUF. Therefore, in view of the settled law of the land there is no doubt in my mind as it is for the assessee to meet the criteria laid down by the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion should be assessed as salary on which the assessee will be entitled to standard deduction under s. 16(1)?" Order T.D. SUGLA, PRESIDENT The ld. members who heard the appeal originally have differed and have stated he point of difference as under: "Whether, on the facts and circumstances of the case, the remuneration received by the assessee individual from the firm of M.P.C. Narayana Nadar Bros. in question should be assessed as salary on which the assessee will be entitled to standard deduction under s. 16(1)?" 2. It is pertinent to mention that there was also a difference of opinion between the ld. members in the case of the HUF of which the assessee is the Karta. By my Third Member order under s. 255(4) of even date, bei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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