1981 (9) TMI 53

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..... ern Steel and General Mills, had entered into an agreement with his own son, Pran Nath, by which the son was to receive a salary of Rs. 250 and certain other amounts for looking after the interests of the assessee in the firm. The reason for this agreement was that the assessee was physically not capable of rendering services, as could be expected of him, to the partnership and he had to engage somebody else to render those services. The amount which was paid to the son out of the assessee's share in the partnership business was claimed as a deduction from the taxable income. It was disallowed by the ITO on the ground that the payment was made for extra-commercial considerations. The total sum which was claimed as deduction was Rs. 7,262. O .....

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..... imed as a deduction. The contention is that the entire amount was paid to the assessee's son for rendering services to the partnership business, and, therefore, it was not an allowable deduction as far as the assessee was concerned. Reliance is placed on the judgment of the Supreme Court in Jitmal Bhuramal v. CIT [1962] 44 ITR 887, which is a case in which an HUF was represented in a partnership through its karta and some junior members had been engaged by the karta to render services on behalf of the family in the partnership firm. It was held that the deduction was not allowable as services were not being rendered to the HUF but to the partnership firm in which the HUF was represented through its karta. We find that the said judgment is n .....

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..... fter his interest in the: firm but it was found that the terms on which he was appointed were set out in a letter appearing with the statement of the case which showed that he was not rendering services to the assessee., but to the firm itself. The passage stated in, the, judgment is (p. 547): " He was in charge of the keys of the shop, and the, safe. He was employed in making purchases for the shop in the wholesale market, in checking the incoming goods and supervising the work of the salesman and other workers of the shop and checking the credit facilities granted to customers. He was also in charge of the cash of the firm. A perusal of this letter clearly indicates that this person was employed to render services to the firm rather tha .....

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