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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 ..... 50 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the partnership agreement were of a different character and were in full subject to levy of tax. The assessee having preferred an application under section 66(1) of the Act before the Tribunal, the following question of law has been referred to this court: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd selling tea, 40 per cent, of its total income is alone taxable as income, profits or gains of a business. The distribution of the share income of the partners amongst the partners is no doubt an appropriation of the profits 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, of the allowance and commission. 3. We shall now refer to the other provisions of the Income-tax Act which have been relied upon by learned counsel for the assessee to substantiate his contention that the whole 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners are not allowed as deductions and if these payments are again included in the taxable income of the partners, the result would be double taxation. In order to remove this inequity, section 14(2) provides that the tax 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an accident which caused his death, and his widow thereupon claimed compensation under the Workmen's Compensation Act, 1897, from the surviving partners. It was held that the deceased having been himself one of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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