TMI Blog1945 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case is a Hindu undivided family which, it is stated in the order of the Income-tax Officer, is the biggest wholesale dealer in grain and grocery in the district of Manbhum. It appears that several members of this family worked in the business carried on by the family and a sum of ₹ 8,901 was paid to them, the payments being described as salary. The Tribunal has found that the sum paid as salary was not excessive or unreasonable and this finding is borne out by the fact that the gross profits made by the family during the year was ₹ 17,42,182. The assessee's claim was that the whole of the sum should be deducted in computing the profits of the business, whereas it was contended on behalf of the Income-tax departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces [1929] 4 I.T.C. 171, it was held by the Nagpur High Court that remuneration paid to a partner doing business in his individual capacity for services rendered to the firm would be a legitimate deduction from the assessable income of the firm; but sums paid to a partner as such styled commission, pagdi (bonus or present) or by any other name would be simply the profits of the firm appropriated among the owners after they had been earned. Again it was held by the Lahore High Court in Electric and Dental Stores v. Commissioner of Income-tax, Punjab [1931] 5 I.T.C. 254, that salary charged by working partners in a firm would be admissible as a deduction in the computation of the profits of the firm under Section 10(2)(ix) if those partners w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been correctly stated by the Tribunal in these words: In a Hindu undivided family no member is bound to work in the business of the Hindu undivided family and if an allowance has been made to a junior member on contractual basis for actual work done and the amount is not excessive and is reasonable, the amount paid is allowable as a deduction. A member of a joint family might conceivably do business in his individual capacity and in that capacity might render services to the joint family trading firm in consideration of which the firm might pay him such remuneration as it would pay to an outsider. If such remuneration is not excessive and is reasonable and is not a device to escape income- tax, then it will be a legitimate d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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