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TMI Blog1962 (11) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... tner to a monthly allowance of ₹ 250 and also a commission at the rate of twelve per cent, on the net profits available for distribution amongst the partners after meeting all the expenses relating to the business of the partnership and charging the monthly allowance of ₹ 250. The assessee received allowance and commission for the assessment years 1956-57, 1957-58 and 1958-59 as per particulars given below : Previous year Year ended Assessment year Allowance Rs. Commission Rs. 31-3-1956 1956-57 3,000 8,811 31-3-1957 1957-58 3,000 4,332 31-3-1958 1958-59 3.000 5,930 Besides the said allowance and commission he also received the share income of ₹ 10,087, Rs- 6,612 and ₹ 14,825 for the three assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;Whether the allowance and commission received by the assessee as the managing partner of Mahendragiri Tea Estate is assessable in his hands to the full hundred per cent, thereof as an item of income distinct and separate from his share of profits therefrom ? " 2. The answer to the question does not present any difficulty as the relevant provisions of the Act are fairly clear. Learned counsel for the assessee addressed a very interesting argument but failed to convince us. In our opinion the assessee cannot successfully contend against the plain meaning and effect of the provisions of the Act, which we shall refer to a little later. Now the assessee claims exemption from assessment to tax to the extent of 60 per cent, of the allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits or losses of the firm in proportion to their respective shares. But the receipt by a partner of any amount over and above his share income from the firm, though warranted by the special terms of the articles of partnership, would not stamp such receipt with the same character as that possessed by the total income of the firm which is divided in accordance with the shares. The fact that the extra allowance and commission received by a partner also emanate from the business income cannot justify the inference that the character of the receipt is not different from the character of the business income of the firm as such. In support of this position we may refer to the decision of the Patna High Court in E.C. Danby v. Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the allowance and commission cannot be brought to tax. In computing the business income of a firm any allowance in respect of any payment by way of interest, salary, commission or remuneration made by the firm to any partner of the firm is not permissible under section 10(4)(b). When the partner is a partner of a firm, irrespective of the fact, whether the firm has made a profit or a loss, the share income of the assessee has to be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the previous year, increased or decreased respectively by his share in the balance of the profit or loss of the firm, after the deduction of any interest, salary, commission or other remuneration payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax shall not be payable by an assessee if a partner of an unregistered firm in respect of any portion of his share in the profits and gains of the firm computed in the manner laid down in clause (b) of sub-section (1) of section 16 on which the tax has already been paid by the firm. These are the main incidents of taxation of a firm registered or unregistered. 5. In our opinion, whatever may be the mode of assessment of a partner of a firm, an assessee partner can claim exemption only under one or other of the provisions of the Act or the Rules, if any. It is also equally clear that double taxation should be avoided, which in essence means that the same amount of receipt (income, profits or gains) shall not be taxed twice in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partners in the firm for which he was working could not be said to have been employed by them and, therefore, the Workmen's Compensation Act was not applicable. At page 328, Collins M.R. observed thus: "The supposition that the deceased man was 'employed' within the meaning of that term as used in the Act would appear to involve that he, as one of the partners, must be looked upon as occupying the position of being one of his own employers. It seems to me that, when one comes to analyse an arrangement of this kind, namely, one by which a partner himself works, and receives sums, which are called wages, it really does not create the relation of employers and employed, but is, in truth, a mode of adjusting the amount that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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