TMI Blog1979 (6) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the loss from the same estate at Rs. 1,685.46. During both the years in question, he was the managing partner of the estate, entitled to draw a salary of Rs. 6,000 per annum for his services as the managing partner of the firm, besides his share of the income under agreements dated 26th July, 1966, and 10th February, 1970. Clause 6 of the earlier agreement and cl. 7 of the later one provided for the payment of remuneration to the managing partner. The returns were rejected by the Agrl. ITO. In assessing to tax, the assessing officer took into account the salary received by the assessee as the managing partner of the firm, as the assessee's agricultural income. On appeal by the assessee, the AAC, relying on the decision of this court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of 1961 and the other is s. 16(1)(b) corresponding to s. 67(1) and (4) of the Act of 1961. There was a prior decision of the Madras High Court in Mathew Abraham v. CIT [1964] 51 ITR 467. Referring to the decision, the Full Bench said : " We are of the view that the salary received by a partner of a firm for services rendered by him to it continues to bear, for purpose of charge at his hands the same character as part of the total income of the firm which has been shared between its partners and that the consequence of applying rule 24 to the total income of the firm computed in accordance with section 10(4)(b) is necessarily that only 40 per cent of the salary as referable to agricultural income can be taken as salary in computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 106 ITR 292. The Supreme Court again dealt with the matter on " first principles plus the bare text of the statute " and reinforced its conclusion from " precedents and booklore ". At page 295 the court observed : " Here the first thing that we must grasp is that a firm is not a legal person even though it has some attributes of personality. Partnership is a certain relation between persons, the product of agreement to share the profits of a business. 'Firm' is a collective noun, a compendious expression to designate an entity, not a person. In income-tax law a firm is a unit of assessment, by special provisions, but is not a full person which leads to the next step that since a contract of employment requires two distinct persons, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to a partner of a firm and s. 67(2) ordaining that the nature of the income derived from an agricultural estate shall be of the same character as the estate itself in the 1961 Act, would make a difference. On an examination of the decision of the Supreme Court and the decision of the Full Bench of the Madras High Court, which it affirmed, we find that the decisions were rested both on jurisprudential grounds as well as on the provisions of the Partnership Act and the general principles of partnership law. We do not think that we would be justified in accepting the assessee's contention based on the two provisions of the I.T. Act on which he relies. We may note that there was no provision in the 1922 Act corresponding to s. 67(2) of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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