| Case ID |
2081d684-45aa-4f94-b3a0-4143618f575d |
| Body |
View case body. Login to View |
| Case Number |
Miscellaneous Judicial Case No. 633 of 1956 |
| Decision Date |
Oct 06, 1958 |
| Hearing Date |
|
| Decision |
The court ruled that the Hindu undivided family, as a partner in a firm, could only claim deductions for salaries paid to its members if it could demonstrate that such payments were made for the purpose of earning profits from the partnership business and were incurred as a matter of commercial expediency. In this case, the court found that Gulzarilal and Madanlal did not render any services to the partnership business, thus denying the deduction claim of Rs. 3,850 under section 10(2)(xv) of the Income Tax Act. The court emphasized that the assessment of whether payments were made wholly and exclusively for business purposes is a factual determination, and the findings of the income tax authorities were upheld. |
| Summary |
This case revolves around the interpretation of section 10(2)(xv) of the Income Tax Act, 1922, concerning salary deductions for members of a Hindu undivided family involved in a partnership. The Patna High Court examined whether the payments made to family members were justified as business expenses. The court concluded that the payment of salaries to Gulzarilal and Madanlal could not be deducted as they did not contribute to the partnership's profits. This decision highlights the significance of demonstrating a direct link between salary payments and the services rendered in the context of commercial expediency. It serves as a crucial precedent for similar cases involving income tax deductions for family members in partnerships. |
| Court |
Patna High Court
|
| Entities Involved |
|
| Judges |
RAMASWAMI, C, J.,
KANHAIYA SINGH, J
|
| Lawyers |
S. N. Dutta,
B. P. Rajgarhia,
Harilal Agarwal,
R. J. Bahadur
|
| Petitioners |
JITMAL BHURAMAL
|
| Respondents |
THE COMMISSIONER OF INCOME TAX, BIHAR & ORISSA
|
| Citations |
1960 SLD 32,
1960 PTD 325
|
| Other Citations |
Jethabhai Hirji & Co. v. Commissioner of Income tax (1949) 17 I T R 533,
Commissioner of Income tax v. Jainarain Jagannath (1945) 13 I T R 411,
Shantikumar Narottam Morarji v. Commissioner of Income tax (1955) 27 I T R 69,
Tata Sons Ltd. v. Commissioner of Income tax (1950) 18 I T R 460
|
| Laws Involved |
Income Tax Act, 1922
|
| Sections |
10(2)(xv)
|