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TMI Blog1948 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... na Iyer, Bhatt and Ganapathi Iyer. The firm was constituted by a deed of partnership dated 10th March, 1942. It was the manufacturer's representative of Kiwi polish etc. Of the three partners, Lakshmana Iyer and Bhatt are also the respective proprietors of commission agency businesses known as Luckman and Company and Bhatt and Company respectively. Even before the constitution of the partnership in question, they were doing commission agency business as well as canvassing business in the said names and their business included also canvassing and selling other goods. The question for decision relates to two sums of ₹ 2,642 and ₹ 3,037 paid by way of commission to Luckman and Company and Bhatt and Company respectively. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. So, he argued, the fact that the proprietors of the two firms in question happened to be partners of the firm would not make a difference. In short, his argument amounted to adding the words "as a partner of the firm" after the words "any partner of the firm". In support of his contention he relied upon cases decided under the English income-tax Statutes. This case appears to be eminently one to which the following observations of their Lordships of the Judicial Committee in Commissioner of Income-tax, Bengal v. Shaw Wallace & Company [1932] ILR 59 Cal. 1343 apply, in the matter of relying on cases decided under the English Statutes for construing provisions in an Indian enactment:- "Again their Lordships woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Court of Appeal that in computing the profits or gains of the partnership for the purpose of assessment in income-tax under Schedule D of the Income Tax Act, 1918, the rent was properly allowed as a deduction having regard to rule 3(c) of the Rules applicable to Cases I and II. No doubt, there are observations of the learned Master of the Rolls at page 544 which are general in nature. Lord Hanworth, M.R., says :- "There is no doubt-and the Attorney-General does not contend otherwise-that if these premises had belonged to some entirely independent owner, the partnership would have been entitled to pay that owner £1,250, and that sum would have been deductible as a proper outgoing in ascertaining the profits and gains, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either by way of salary or interest on borrowings from them, remuneration or commission, were allowable deductions in computing the profits of the firm. In Chief Commissioner of Income-tax v. B.S. Mining Co. [1922] 1 ITC 176 a Full Bench of this Court ruled that the salaries paid to the partners of a firm are not admissible as deductions in the computation of the profits of the firm for income-tax purposes, and they were treated as part of the profits. But in Ramakrishna Ramnath v. Commissioner of Income-tax, C.P [1929] 4 ITC 171, a distinction was pointed out between remuneration paid to a partner doing business in his individual capacity for services rendered to the firm which was a legitimate deduction from the assessable income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the payment of salaries to them was a device to escape income-tax. In Commissioner of Income-tax, Madras v. Subramanian Chettiar [1928] ILR 51 Mad. 787 a Full Bench of five Judges of this Court had to decide the question whether interest paid to a partner in respect of a loan advanced by him to the partnership was a legitimate item of business expenditure within the meaning of Section 10(2)(ii) of the Indian Income-tax Act. It was held that where a partner as partner genuinely lends money, beyond the initial capital, to the partnership at an agreed reasonable rate of interest and the money is used for capital expenditure, the interest paid by the partnership to him in the year of assessment must be deducted in computing the profits or ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to look simply at what is clearly said. There is no room for any intendment: there is no equity about a tax; there is no presumption as to a tax; you read nothing in; you imply nothing, but you look fairly at what is said and at what is said clearly and that is the tax". Looking, then, fairly at what has been said, it is clear that there is no distinction made between payments by way of interest, commission, salary or remuneration made to a partner as a partner and made to him in a different character. There is nothing to indicate that some categories of interest, salary, commission, or remuneration, though paid by the firm to a partner, were to fall outside the scope of that provision. It is not for us to speculate on the object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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