| Case ID |
41aaa56c-a1ee-401f-a5fd-1ef72c84994a |
| Body |
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| Case Number |
TAX CASE No. 213 OF 1965 (REFERENCE No. 107 OF 196 |
| Decision Date |
Feb 26, 1969 |
| Hearing Date |
|
| Decision |
The court held that the remuneration paid by the Hindu Undivided Family (HUF) to the karta for carrying on the family's business can be allowed as a deduction while computing the income of the HUF. The revenue's argument that it was the karta's duty under Hindu law to manage the family business without remuneration was rejected. The court emphasized that the essence of the matter was the service rendered by the karta and the commercial expediency of the payment. The decision favored the assessee, allowing the remuneration as a valid deduction. |
| Summary |
The case revolves around the interpretation of Section 28(i) of the Income-tax Act, 1961 regarding business deductions. Specifically, it addresses whether a Hindu Undivided Family (HUF) can deduct remuneration paid to the karta for managing the family's business, even if such remuneration is not based on a formal agreement. The court ruled in favor of the assessee, establishing that the payment of remuneration is valid if it constitutes a commercial necessity. This case is significant for tax practitioners and advocates as it clarifies the tax laws governing family businesses and remuneration structures. Understanding the nuances of business deductions under the Income-tax Act is crucial for ensuring compliance and optimizing tax liabilities. |
| Court |
Madras High Court
|
| Entities Involved |
Not available
|
| Judges |
Veeraswami, J.,
Ramaprasada Rao, JJ.
|
| Lawyers |
V. Balasubrahmanyan,
J. Jayaraman,
P.R. Ranganathan
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
S.A.P. Annamalai
|
| Citations |
1970 SLD 372,
(1970) 75 ITR 109
|
| Other Citations |
Jitmal Bhuramal v. CIT [1962] 44 ITR 887 (SC),
Jugal Kishore Baldeo Sahai v. CIT [1967] 63 ITR 238 (SC)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
28(i)
|