9911796707
TMI Blog1969 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, and 30th September, 1955. The assessee, who is the applicant in this case, is a firm manufacturing sugar. It owns its mills at Mohiuddinpur in the district of Meerut. For the relevant assessment years it was not accorded registration under section 26A of the Act. The firm was constituted by a deed of partnership dated the 21st of August, 1939. There were two sets of partners, namely, the partners of the first set represented by Lala Suraj Bhan, the karta of the joint family, styled as M/s. Dinanath Nanak Chand ; the second set consisted of four partners, namely, (1) Lala Devi Prasad, (2) Lala Jwala Prasad (3) Lala Sheo Prasad, (4) Lala Ganpat Prasad, and (5) Lala Matu Ram, Lala Mai Dhan and Lala Mai Dayal. The two sets of partners were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration paid to the four members of the board of management during the relevant previous year and in the next following assessment the sum of Rs. 64,700 was claimed as deduction on the same ground, in the computation of the profits of the firm. The Income-tax Officer disallowed the claims of the assessee-firm for both the years and added the amounts in question to the total income for the relevant previous years. The assessee went up in appeal to the Appellate Assistant Commissioner against the assessments made by the Income-tax Officer but the latter turned down the appeal of the assessee and confirmed the assessment. The assessee then appealed to the Tribunal. Before the Tribunal the assessee contended that the payments in question were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artners only for the purpose of computation of the rate of income-tax payable by the partners concered. The partners do not have to pay tax directly on the amount of the share income which they receive from the firm in view of the provisions of section 14(2)(a) read with section 16(1)(b) of the Act. The Tribunal observed that the intention of the legislature in framing section 14(2)(a) and 16(1)(b) was obviously to avoid double taxation in such cases. In the present case, the Tribunal pointed out that Sri Mai Dhan was assessed to tax on the entire amount of the salary and remuneration received by him from the unregistered firm as one of the members of the board of management. That being so, in the opinion of the Tribunal, it was only fair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1922 ? " (2) Whether on the facts and in the circumstances of the case the sum of Rs. 64,700 was admissible to the assessee during the assessment year 1956-57, in view of section 10(4)(b) of the Indian Income-tax Act, 1922 ? " In our opinion the Tribunal has entirely misconceived the legal position and its order in point cannot be sustained. Section 10(4)(b) of the Act runs as follows : " Nothing in clause (ix) or clause (xv) of sub-section (2) shall be deemed to authorise the allowance of any sum paid on account of any cess, rate or tax levied on the profits or gains of any business, profession or vocation or assessed at a proportion of or otherwise on the basis of any such profits or gains ; and nothing in clause (xv) of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt, that one of the partners, viz., Sri Mai Dhan, has already been assessed to tax in respect of the remuneration received from the firm as a member of the board of management for the assessment years 1954-55 and 1955-56. It appears that taxation of the remuneration received by Sri Mai Dhan from the firm in his hands was not proper. That does not, however, justify the allowance of any salary, commission or remuneration paid by the firm to either Sri Mai Dhan or the other members of the board of management in contravention of the clear provisions of section 10(4)(b). The bar imposed section 10(4)(b) is clear and unambiguous and the fact that the payment of salary and remunelation to the partners, who happened to be also the members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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