TMI Blog2010 (7) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... ) confirmed the addition in respect of remuneration of ₹ 3,50,000/- paid to a partner who was working in the firm in HUF capacity. 3. The facts of the case are that Shri Asit H. Shah is working in the partnership firm on behalf of his HUF. Remuneration was paid to Shri Asit H. Shah which was disallowed under section 40(b) of the Act. According to the AO salary/remuneration can be paid to an individual only and since assessee is a partner in the firm in HUF capacity he is not an individual and, therefore, no salary/remuneration can be allowed to him. The AO has referred to section 40(b) and explanation-4 thereto to emphasise the point that salary can only be allowed if individual is partner in the firm in individual capacity only. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the material on record. In our considered view the authorities below were not justified in not allowing remuneration to the HUF. It is undisputed fact that Shri Asit H. Shah was a partner in HUF capacity but in law only an individual can be a partner in the partnership firm. It has been held by the courts that an individual can represent any other entity while he is acting as a partner. In that case the profits given to the individual would be in fact the profits of the entity to whom such individual is representing. Whether such remuneration or salary paid to the individual is assessable in the hands of individual or in the hands of the concern to which such individual is representing in the firm, is not a deciding factor about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement the partnership is popularly described as one between the two Hindu undivided families but in the eye of law it is partnership between the two kartas and the other members of the families do not ipso facto become partners. There is, however, nothing to prevent the individual members or one Hindu undivided family from entering into a partnership with the individual members of another Hindu undivided family and in such a case it is a partnership between the individual members and it is wholly inappropriate to describe such a partnership as one between two Hindu undivided families. This decision has been noted in the case of Vanson Kids Suff 83 ITD 268 wherein also the partner representing in HUF capacity was held to be a working partne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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