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Commissioner of Income Tax, Madras Vs. S.A.P. Annamalai, Madras - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 213 of 1965 (Ref. 107)
Judge
Reported inAIR1971Mad52; [1970]75ITR109(Mad)
AppellantCommissioner of Income Tax, Madras
RespondentS.A.P. Annamalai, Madras
Cases ReferredJitmal Bhurmal v. Commr. of Income
Excerpt:
- - but we fail to see what difference does it make so long as a matter of fact salary has been paid to the kartha of the family for managing or carrying on its business......in each of the years to s. a. p. annamalai could be a deduction the computation of the income of hindu undivided family for the assessment years 1959-60 to 1961-62 respectively?'we are of the view that the claim was rightly disallowed (sic allowed). we are unable to accept the contention for the revenue that it was the duty of the kartha under the hindu law to carry on the business of the family and do his utmost for furthering the same and, therefore, the remuneration claimed by annamalai and paid by the hindu undivided family should be disallowed as a deduction. it seems to us that the point is really covered by jugal kishore baldeo sahai v. commr. of income-tax. : [1967]63itr238(sc) . following an earlier decision in jitmal bhurmal v. commr. of income-tax : [1962]44itr887(sc) the.....
Judgment:

Veeraswami, J.

1. This reference relates to the assessment years 1959-60 to 1961-62. The assessment was in the status of Hindu undivided family which consisted of Annamalai, the Kartha, and his minor son. Annamalai is a Master of Arts and a Law Graduate. He was engaged as an Editor of a Tamil magazine by name 'Kumudam'. The assessee claimed deduction of a certain sum for each of the year as a deduction in the computation of the income from the magazine. There is no dispute that for each year the amount claimed was paid to Annamalai as remuneration for his services as Editor of the magazine. The Revenue disallowed it; but the Tribunal accepted the claim. The question before us is:

'Where on the facts and in the circumstances of the case, the remuneration of Rs. 9000. Rs. 6000 and Rs. 9000 paid in each of the years to S. A. P. Annamalai could be a deduction the computation of the income of Hindu undivided family for the assessment years 1959-60 to 1961-62 respectively?'

We are of the view that the claim was rightly disallowed (sic allowed). We are unable to accept the contention for the Revenue that it was the duty of the Kartha under the Hindu Law to carry on the business of the family and do his utmost for furthering the same and, therefore, the remuneration claimed by Annamalai and paid by the Hindu undivided family should be disallowed as a deduction. It seems to us that the point is really covered by Jugal Kishore Baldeo Sahai v. Commr. of Income-tax. : [1967]63ITR238(SC) . Following an earlier decision in Jitmal Bhurmal v. Commr. of Income-tax : [1962]44ITR887(SC) the Supreme, Court held that the remuneration paid by the Hindu undivided family to the Kartha who managed the family business should be deducted as expenditure under Section 10(2)(xv), Observed the Supreme Court:--

'This Court in : [1962]44ITR887(SC) has already held that a Hindu undivided family can be allowed to deduct salary paid to a member of the family, if the payment is made as a matter of commercial or business expediency.'

: [1967]63ITR238(SC) was a case of a Kartha, though the earlier case related to a junior member of the family. For the Revenue it is said that : [1967]63ITR238(SC) is distinguishable because the payment of remuneration was on the basis of an agreement which is lacking in this case. But we fail to see what difference does it make so long as a matter of fact salary has been paid to the Kartha of the family for managing or carrying on its business. In this case the other member of the family being a minor, one cannot visualise an agreement. But that does not mean that the Kartha who was carrying on the joint family business and particularly the magazine had no power acting for the joint family, to allow salary for his services from the funds of the joint family business. The essence of the matter is the service rendered by the kartha of the family in consideration of the remuneration him, whether it be founded on an agreement or not. No question has been raised at any stage below that the expenditure was not a commercial or business expediency.

2. We answer the question against the Revenue with costs; counsel's fee Rs. 250.

3. Reference answered accordingly.


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