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TMI Blog2003 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... AVELU. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The assessment year in this case is 1982-83. The question referred is as to whether the Tribunal was right in holding that the remuneration paid by the assessee-firm to one of its partners who was a partner in his capacity as karta of the Hindu undivided family was not taxable in computing the total income of the assessee-firm and that the provisions of section 40(b) of the Income-tax Act are not attracted. The amount that was disallowed was paid to one of the partners as a technical consultation fee. Though the Assessing Officer and the appellate authority did not regard that payment as falling outside the description contained in section 40(b), the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the assessee that when a payment is not made to a partner as partner but in respect of the services rendered by him to the partnership it falls outside the sweep and range of the sub-section." Section 10(4)(b) of the 1922 Act reads thus: II any allowance in respect of any payment by way of interest, salary, commission or remuneration made by a firm to any partner of the firm." Section 40(b) of the 1961 Act as it stood at the relevant time reads thus: ". . . any payment of salary, bonus, commission or remuneration paid to any partner who is not a working partner." The Supreme Court in the case of Rashik Lal and Co. v. CIT [1997] 229 ITR 458, decided by a two-judge Bench held, that a partner does not act in a rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to whom remuneration is paid as a person who besides being a partner is something more or something different when he deals with the firm. A partner in a firm is very much a partner and it is that status which defines his rights and also imposes on him the obligation to render all the services that he is capable of for the advancement of the objects of the firm. Such a person cannot seek to avoid the effect of the prohibition made in the statute by describing himself as an expert. Any expertise that he may possess is required to be made available to the firm as a partner and even if remuneration therefor is permissible in terms of the partnership deed, nevertheless, having regard to the statutory provision which prevailed until the law wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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