| Case ID |
36db6fb9-73b5-4e35-b3b6-28f1e9e36b71 |
| Body |
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| Case Number |
Civil Appeals Nos. 2108 and 2109 of 1987 |
| Decision Date |
Oct 01, 1997 |
| Hearing Date |
|
| Decision |
The Supreme Court held that there was no conflict in the law laid down in the case of R. M. Chidambaram Pillai [1977] 106 ITR 292 (SC) with the earlier two cases. The decision of the larger bench will prevail in the event of any conflict. The court clarified that salary given to a partner for managing the firm is treated as individual income, while salary as part of return on investments made by a Hindu undivided family (HUF) is assessed as HUF income. The Tribunal's decision to not assess the salary in the hands of the HUF was upheld, leading to the dismissal of the appeal with no costs. |
| Summary |
This case revolves around the interpretation of income tax laws concerning the assessment of salary paid to managing partners within a Hindu Undivided Family (HUF) structure. The Supreme Court of India addressed the conflict in interpretations regarding whether the salary received by managing partners could be assessed as part of the HUF income or as individual income. The court ruled that salary for services rendered by partners is individual income and cannot be attributed to the HUF unless it is derived from the investments made by the HUF in the partnership. This ruling provides clarity on how income is categorized under the Income Tax Act, 1961, and reinforces the precedence of decisions made by larger benches over smaller ones. Keywords such as 'Income Tax Act', 'Hindu Undivided Family', and 'Supreme Court decisions' are essential for understanding the implications of this case within the broader context of tax law and family business structures. |
| Court |
Supreme Court of India
|
| Entities Involved |
Not available
|
| Judges |
S. C. SEN,
S. SAGHIR AHMAD
|
| Lawyers |
B. S. Ahuja,
Ms. Renu George,
B. K. Prasad,
A. Sharan
|
| Petitioners |
COMMISSION OF INCOME TAX
|
| Respondents |
OTHERS,
TRILOK NATH MEHROTRA
|
| Citations |
1999 SLD 662 = (1999) 79 TAX 183
|
| Other Citations |
Ra Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33 (SC),
Prem Nath v. CIT [1970] 78 ITR 319 (SC),
CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 293 (SC)
|
| Laws Involved |
Income Tax Act, 1961,
Constitution of India
|
| Sections |
2,
2(31),
141
|