2003 (11) TMI 36

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... is 1982-83. The question referred is as to whether the Tribunal was right in holding that the remuneration paid by the assessee-firm to one of its partners who was a partner in his capacity as karta of the Hindu undivided family was not taxable in computing the total income of the assessee-firm and that the provisions of section 40(b) of the Income-tax Act are not attracted. The amount that was d .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... This court, as far back as in the year 1965 in the case of A.S.K. Rathnaswamy Nadar Firm v. CIT [1965] 58 ITR 312 had, after considering the language contained in section 10(4)(b) of the Indian Income-tax Act, 1922, which is similar to the language employed in section 40(b) of the Income-tax Act, 1961, as it stood during the assessment year 1982-83 observed thus: "It is manifest that this sub-s .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ce in respect of any payment by way of interest, salary, commission or remuneration made by a firm to any partner of the firm." Section 40(b) of the 1961 Act as it stood at the relevant time reads thus: ". . . any payment of salary, bonus, commission or remuneration paid to any partner who is not a working partner." The Supreme Court in the case of Rashik Lal and Co. v. CIT [1997] 229 ITR 458, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... r the benefit of any other person. The earlier decision of this court in the case of A. S. K. Rathnaswamy Nadar Firm v. CIT [1965] 58 ITR 312 which was noticed in the later case in CIT v. Surendra Manilal Mehta [1985] 154 ITR 264 (Mad) is in accordance with the law declared by the Supreme Court in the case of Rashik Lal and Co. v. CIT [1998] 229 ITR 458. The law laid down in the case reported in .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ade in the statute by describing himself as an expert. Any expertise that he may possess is required to be made available to the firm as a partner and even if remuneration therefor is permissible in terms of the partnership deed, nevertheless, having regard to the statutory provision which prevailed until the law was amended in 1992, payment so made cannot be regarded as being items of expenditure .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X