TMI Blog1969 (3) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1955-56 the respondent declared his share of profits from the four firms at Rs. 77,027 and he claimed an allowance of Rs. 13,283 being payment of salary and bonus to staff, expenses for maintenance and depreciation of motor-car, travelling expenses and interest. The Income-tax Officer, Hazaribagh, allowed the claim for interest as a permissible deduction and disallowed the rest. In the view of the Income-tax Officer, since the respondent did not carry on any independent business, the amounts, except interest, were not claimable by the respondent on his own account; if at all, the amounts should have been claimed as business expenses incurred in the accounts of the four firms. For the assessment year 1956-57 the respondent declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th others, profits and gains earned by him are income liable to be taxed under section 10 of the Indian Income-tax Act, 1922. Share in the profits of a partnership received by a partner is "profits and gains of business" carried on by him and is on that account liable to be computed under section 10, and it is a matter of no moment that the total profits of the partnership were computed in the manner provided by section 10 of the Income-tax Act and allowances admissible to the partnership in the computation of the profits and gains were taken into account. Income of the partnership carrying on business is computed as business income. The share of the partner in the taxable profits of the registered firms liable to be included under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances are deductible therefrom in determining the taxable income of the partner. The legal principles which we have endeavoured to set out are well settled by several decisions. In Shantikumar Narottam Morarji v. Commissioner of Income-tax the High Court of Bombay held that it is not correct as a general legal proposition that a partner in a registered firm is not entitled to claim any deduction against the share of the profits included in his total income, the share having been arrived at on the assessment of the firm with regard to its profits. It would be open to the partner to claim a deduction provided he satisfies the taxing authority that such deduction represents necessary expenditure, the expenditure being incurred in order to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be to the family in relation to the business of the family. Counsel for the Commissioner relied upon an unreported judgment of the High Court of Calcutta in Iswardas Subhkaran v. Commissioner of Income-tax. In that case a Hindu undivided family entered into a partnership agreement with third parties for the purpose of carrying on a rice mill business. It was not possible for any of the members of the family to attend personally to that business and, therefore, the family employed a munim to look after its interest. Salary paid to the munim was claimed as an allowance in determining the taxable income out of the share of the partnership income. Chakravartti C. J., delivering the judgment of the court, was of the opinion that, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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