9911796707
TMI Blog1996 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, 1961, is analogous in content to the provisions of section 10(4)(b) of the Indian Income-tax Act, 1922. The statutory provision relates to situations relating to the amounts that was not to be deducted in computing the income chargeable under the head " Profits and gains of business or profession ". In regard to this situation, in the case of any firm in accordance with the provisions of section 40(b) of the Act, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner a the firm cannot be claimed to be deducted in computing the income chargeable under the aforesaid head. Therefore, the question is as to whether the partnership firm in question is concerned with the payment of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo proprietors--Sri Veeriah Reddiar and Sri Thiruvenkatam. The property was business at Quilon being carried on in the name and style of S. Veeriah Reddiar. This was purchased by Sri Ramachandran on behalf of the Hindu undivided family ; in other words, in his capacity as the karta of the Hindu undivided family. In the present proceedings, the fact that deposit of Rs. 7,20,000 was kept by Sri Ramachandran with the partnership firm in his individual capacity as the karta of the Hindu undivided family with 12 per cent. interest per annum is not in dispute. The Income-tax Officer referred to the general provision of law relating to the position of the partners of the firm. The officer held that it is not a question for consideration as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is different with reference to the work or labour put in by one of the partners because such a partner works in the firm and receives salary as an individual or as a representative of the family cannot be known from the way he functions and, therefore, payment of salary must stand on a different footing. In this process of reasoning, the first appellate authority recorded a finding in the following manner : " Examined from this standpoint, it will be clear in this case that advances of Rs. 7,20,000 made by Shri V. Ramachandran to the appellant were in his individual capacity and his membership of the firm was in the capacity as the karta of the Hindu undivided family, which was the partner. Hence, there is a lack of identity in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85, holding that salary and interest paid by the firm to some of the partners as individuals who were also in their capacity as the karta of the Hindu undivided family during the accounting years in question and it is held that their claim could not be disallowed under section 40(b) of the Act. The Tribunal has also relied upon the similar decision of the Punjab and Haryana High Court in Hindustan Steel Forgings v. CIT [1989] 179 ITR 280. Additionally, learned counsel for the assessee has invited our attention to the decision of the Calcutta High Court in CIT v. Mohanlal Bhagwati Prosad [1993] 204 ITR 234. After going through the judgment we find that the Calcutta High Court has taken a resume of all the reported decisions that could be l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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