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TMI Blog1979 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that three of the partners, namely, Prem Nath, Bal Kishan and Kishan Lal, had entered into partnership in representative capacities of their respective Hindu undivided families. They held the status of kartas in those families. The firm allowed various amounts as salaries to these partners for the services rendered by them to the partnership as working partners. They claimed that they were bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Tribunal was right in holding that the salaries paid to Shri Prem Nath, Shri Bal Kishan and Shri Kishan Lal were not allowable as a revenue expenditure of the assessee in the assessment years 1957-58, 1958-59, 1959-60, 1960-61 and 1961-62? " It is now well-settled that a HUF cannot, as such, enter into a contract of partnership with another person or persons. The karta of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Supreme Court in the case of CIT v. Kalu Babu Lal Chand [1959] 37 ITR 123. A perusal next of the provisions of s. 10(4)(b) of the I.T. Act, 1922, shows that it placed an absolute prohibition against allowance of expenditure in the nature of interest, salary or commission paid by a firm to any partner. The same is not a permissible deduction in the hands of the firm. It does not make the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73 is entirely distinguishable inasmuch as the salary allowed there was not to the partner in his capacity as such. Rather the Central Government had set up a management board of partners under the Essential Supplies (Temporary Powers) Act. Whatever salary was allowed was in his status as authorised controller which was treated as distinct from his status as partner, and involved no element of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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