9911796707
TMI Blog1991 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961, as a deduction while computing the business income of the assessee ?" The assessee is a partnership firm which carries on business in sale and purchase of several commodities as well as of operation of mining lease. The following are partners of the firm : (a) Popatlal Devram, (b) Jayantilal Jagmal, (c) Pragji Devram, (d) Ratilal Odhavji, (e) Rashiklal P. Rathor. Popatlal is the father of the last mentioned partner Rashiklal. On April 1, 1957, there was an oral partition of the share of Popatlal in the firm amongst Popatlal, his wife and two sons including Rashiklal. The assets of Rashiklal continued to be invested in the partnership firm. Rashiklal is the karta of his smaller Hindu undivided family. While the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived as commission was also included. The Revenue preferred an appeal against the appellate order before the Income-tax Appellate Tribunal. Before the Tribunal, reliance was placed by the Department on a decision in Agarwal and Co. v. CIT [1970] 77 ITR 10 (SC), where it was observed that the concept of a Hindu undivided family joining a partnership creates considerable difficulty since it is fluctuating body whose composition changes by birth, death, marriage and divorce. Accordingly, a partnership is to be constituted by individuals. Such individual may be a benamidar of another in which case benefits received by the individual from the partnership would be of the real owner. For the purpose of partnership, the individual benamidar wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear finding that Rashiklal was made commission agent on account of his own skill, learning and acumen need not be considered in this case. The circumstances under which Rashiklal was to be paid commission as reflected in the agreement were known, to the firm. The assessee ought to have brought materials to indicate that payment to Rashiklal was not payment to a partner. Accordingly, the general presumption being that the payment to a karta enures to the benefit of the undivided family, payment of commission under the agreement has rightly been held by the Tribunal on the facts and in the circumstances of the case to be payment to a partner exigible to tax in view of the prohibition under section 40(b). There is also no prohibition for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
