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Commissioner of Income-tax Vs. A.M. Kaithan - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 205 of 1966 (Reference No. 52 of 1966)
Judge
Reported in[1972]85ITR14(Mad)
ActsIncome Tax Act, 1922 - Sections 10(2) and 23(5)
AppellantCommissioner of Income-tax
RespondentA.M. Kaithan
Appellant AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Respondent AdvocateK. Srinivasan, ;D.S. Meenakshisundaram and ;K.C. Rajappa, Advs.
Cases ReferredBasantlal Gupta v. Commissioner of Income
Excerpt:
- .....general swadesi stores, and for the assessment years 1958-59 1959-60 and 1960-61, he derived share income of rs. 18,313, rs. 24,991 and rs. 26,677, respectively. from the share income received by him, the assessee claimed as deduction under section 10(2)(xv) of the income-tax act, 1922, the salary which he has paid to one mr. dalmia, said to have been appointed by him for looking after his interests in the partnership. the income-tax officer disallowed his claim for deduction on the ground that the share income of the assessee having been arrived at after giving deductions under section 23(5)(a) it is not possible to make further deductions under section 10(2)(xv) in the individual assessment of the assessee as against his share income from the firm. but the income-tax officer,.....
Judgment:

Ramanujam, J.

1. The assessee in this case is a partner in a registered firm called General Swadesi Stores, and for the assessment years 1958-59 1959-60 and 1960-61, he derived share income of Rs. 18,313, Rs. 24,991 and Rs. 26,677, respectively. From the share income received by him, the assessee claimed as deduction under Section 10(2)(xv) of the Income-tax Act, 1922, the salary which he has paid to one Mr. Dalmia, said to have been appointed by him for looking after his interests in the partnership. The Income-tax Officer disallowed his claim for deduction on the ground that the share income of the assessee having been arrived at after giving deductions under Section 23(5)(a) it is not possible to make further deductions under Section 10(2)(xv) in the individual assessment of the assessee as against his share income from the firm. But the Income-tax Officer, however, gave a definite finding that the said Mr. Dalmia has been looking after the interests of the assessee in the firm, and that in fact he was paid his salary by the assessee, and not by the firm. The Appellate Assistant Commissioner also agreed with the view of the Income-tax Officer. The Tribunal, however, held following the decision of this court in Basantlal Gupta v. Commissioner of Income-tax that the assessee is entitled to claim deduction under Section 10(2)(xv) in his individual assessment, even though the share income has been arrived at after giving deductions under Section 23(5)(a). The Tribunal also gave a specific finding that Mr. Dalmia was rendering service only to the assessee by looking after his interests in the firm of General Swadesi Stores in which the assessee was a partner, and that he got remuneration only from the assessee. In view of this finding, it has to be taken that the assessee engaged the services of Mr. Dalmia to earn the share income from the partnership.

2. The question as to whether any deduction under Section 10(2)(xv) is permissible as against the share income received by a partner in his individual assessment has been answered in the affirmative by a decision of this court in Basantlal Gupta v. Commissioner of Income-tax, : [1963]50ITR541(Mad) , which has been approved by the Supreme Court in Commissioner of Income-tax v. Ramniklal Kothari, : [1969]74ITR57(SC) . It is therefore clear that the assessee has been rightly held to be entitled to the deduction from his share income of the salary paid by him to Mr. Dalmia. In this view, the question referred is answered in the affirmative and against the revenue. The assessee will have his costs. Counsel's fee is Rs. 250.


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