TMI Blog1958 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ation mentioned in the agreements. Copies of these documents are annexures 'A' and 'A-1' of the statement of the case. In the assessment for the year 1953-54 the assessee claimed that the sum of ₹ 6,600 should be deducted under section 10(2)(xv) of the Income-tax Act as the remuneration paid to the two coparceners for a period of 11 months. The Income-tax Officer disallowed the whole claim except the sum of ₹ 600, on the ground that the payment of salary to the members of the Hindu undivided family had been claimed only for the purpose of reducing the incidence of taxation and not on any principle of commercial expediency. An appeal was taken before the Appellate Assistant Commissioner against the order of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the Appellate Tribunal was wrong as a matter of law in holding that for the services rendered to the partnership business the assessee was not entitled to claim any deduction of the salaries paid to Gulzarilal and MadanlaJ. The submission of learned counsel was that the Hindu undivided family owned twelve annas share in the partnership business, called Hiralal Gulzarilal, and for earning profits under the partnership the assessee had to employ the two coparceners, Gulzarilal and Madanlal, and, therefore, it was entitled under section 10(2)(xv) of the Income-tax Act to claim the expenses incurred in payment of the salaries to the two coparceners from the profits derived from the partnership business as its share. In support of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided family by way of remuneration for services rendered in the business of the family can be legitimately deducted in computing the profit of the business will very largely depend on the facts of each case, but the amount paid can be legitimately deducted if it is found to be a bona fide payment to a bona fide employee for services actually rendered and is not excessive or unreasonable and is not a device to escape the income-tax. The point therefore for determination is whether the payments have been made to the members of the family as a bona fide remuneration for the services rendered by them and are not excessive or unreasonable or they are merely a device to escape the income-tax. A scrutiny of the appellant's past records shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation. It was pointed out by learned counsel on behalf of the assessee that the view of the Appellate Assistant Commissioner with regard to payment to Kunjlal and Gobardhanlal has been set aside by the Appellate Tribunal. But the finding of the Appellate Assistant Commissioner as to the payment to Gulzarilal and Madanlal has not been upset by the Appellate Tribunal, and it must be taken that it affirmed the view taken by the Appellate Assistant Commissioner on this point. We, therefore, proceed upon the footing that the finding of fact of the income-tax authorities in this case is that neither Gulzarilal nor Madanlal has rendered any service to the parlnership business nor contributed to the earning of profits to the Hindu undivided fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and the particular services rendered by the employee which called for a special remuneration at the hand of the employer. It is open to the Income-tax authorities, after taking all these matters into consideration, to reach the conclusion that the payment was not wholly and exclusively for the purposes of the business of the assessee. That is the principle laid down by the Bombay High Court in Jethabhai Hirji Co. v. Commissioner of Income-tax [1949] 17 ITR 533 . It is manifest, therefore, that the question whether the amount was expended wholly and exclusively for the purposes of the business is primarily a question of fact to be determined by the Income-tax authorities. It is contended on behalf of the assessee in this case that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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