TMI Blog2019 (12) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm gets support in the facts and circumstances of the present case. This fact cannot be controverted that both HUF have provided unsecured loan to the assessee partnership firm, which substantiate that the family funds of HUF has been used by the assessee s partnership firm to financially support and enhance its business. When the contribution of an individual, who helps the firm in two capacities viz; first in the capacity of partner and secondly as Karta of HUF cannot be segregated satisfying and clearly establishing the factum of the services rendered towards payment of commission to the HUF but the factum of use of HUF funds by the partnership firm in the form of secured loan in the business of assessee firm, bring home the suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission so paid should be allowed in the facts and circumstances of the case. 2. For that commission of ₹ 3 lakh each paid to HUFs of two partners Sri Bikram Agarwal and Vinay Agarwal for services rendered is an allowable business expenditure and should be fully allowed in the hands of the firm. 3. For that the learned Commissioner of Income Tax (Appeals) acted beyond the scope of the Tribunal order setting aside the case to him with certain direction which were not followed and therefore his order is liable to be quashed in the facts and circumstances of the case. 3. Ld Authorised Representative (AR) submitted that the CIT(A) is wholly unjustified in holding that the commission paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the commission paid by the assessee should be allowed as business expenditure. Ld A.R. also submitted that even during financial year 2012-13 pertinent to assessment year 2013-14, the unsecured loan is further enhanced. Therefore, the commission paid to both HUFs should be allowed. 4. Ld AR also submitted that while paying commission to both HUF entities, the assessee partnership firm deducted TDS and the commission earned by the recipient HUFs has been duly shown by them in their income tax returns and same was offered for taxation and credit for TDS was also claimed. Ld AR submitted that during assessment year 2012-13, the assessee paid commission of ₹ 20,93,204/- including impugned commission paid to both HUFs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l fact-finding authority and, as it has itself noticed in the judgment under challenge, the Tribunal had held that the remuneration and commission received by the Karta of the HUF were earned by him on account of his personal qualifications and exertions and not on account of the investment of the family funds in the company and, therefore, could not be treated as the income of the HUF. The High Court, having analysed the law, rightly concluded that the broad principle that emerged was whether the remuneration received by the coparcener was in substance 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 compensation made for services rendered by the individual copar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the HUF and it was a compensation made for services rendered by the individual co-parcener of the HUF then same is to be treated as income of the individual co-parcener. 8. In our humble understanding, the remuneration is a wide term which includes commission also. As we have already noted above that from the balance sheet of both recipients and the assessee partnership firm, it reveals that Bikram Agarwal, HUF provided unsecured loan of ₹ 9,02,401.00 and Vinay Agarwal provided unsecured loan of ₹ 13,08,151 during financial year 2011-12 pertaining to assessment year 2012-13 and during subsequent assessment year 2012-13 relevant to assessment year 2013-14, the outstanding amount of unsecured loan as on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of an individual, who helps the firm in two capacities viz; first in the capacity of partner and secondly as Karta of HUF cannot be segregated satisfying and clearly establishing the factum of the services rendered towards payment of commission to the HUF but the factum of use of HUF funds by the partnership firm in the form of secured loan in the business of assessee firm, bring home the support of the proposition rendered by Hon ble Supreme Court in the case of K.S.Subbiah Pillai (supra). Therefore, in view of foregoing discussion, we reached to a logical conclusion that the commission paid by the assessee firm to HUFs is allowable and thus, we direct the Assessing Officer to delete the addition of ₹ 3 lakhs each to both HUF an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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