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TMI Blog1984 (12) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the assessee-family here as share of profits from the firm or as the income of the karta in his individual capacity. The relevant factual position is as under : ------------------------------------------------------------------------------- Assessment Salary paid Interest paid Assessee-family's Total of year to karta to karta share of profit columns 2, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 12,985 29,868 1983-84 5,000 10,665 17,864 33,529 -------------------------------------------------------------------------------- 3. The ITO brought to tax in the hands of the assessee-family, the salary and interest income of the karta also for each of the three years with the brief remark that in doing so, he was following the decision of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by an individual. This cannot be regarded as part of the normal duty of a partner. 5. There was also sufficient judicial authority for allowing the assessee's claim---CIT v. Gurunath V. Dhakappa [1969] 72 ITR 192 (SC) and Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33 (SC). 6. As regards the interest income this was on the credit balance in the katra's individual account in the books of the firm. This balance merely represented the accumulated deposits of the salary income of each year. This income was also the individual income of the karta. The revenue being aggrieved is in further appeal. 5. Shri V.S. Kandaswamy, the departmental representative, submitted that the AAC's action was bad in law. He contended, if it could be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 700 per month' for 'rendering service' to the partnership. In proceedings for assessment of income-tax of the HUF, the ITO rejected the contention that the remuneration paid to Prem Nath was the individual income of Prem Nath. The Supreme Court held that the ITO's action was wrong. Briefly, the reasoning of the Supreme Court was as under: (a) Prem Nath was a 'working partner' and he was allowed a salary of Rs. 700 per month. There is no evidence on record that the remuneration agreed to be paid was not for services tendered to the partnership. (b) In Gurunath V. Dhakappa's case the karta of a family joined a registered firm as partner representing his family. He was appointed manager of the firm on a remuneration of Rs. 500 per month. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the coparcener was in substance though not in form was but one of the modes of return made to the family because of the investment of the family funds in the business; or whether it was a compensation made for the services rendered by individual coparcener. If the former, it is an income of the family but if it is the latter then it is the income of the individual coparcener. Where it is essentially a remuneration for the services rendered by a coparcener, the circumstance that his services were availed of because he was a member of the family which had invested funds in that business or that he had obtained qualification shares from out of the family funds would not make the receipt, the income of the family. Similarly, where the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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