Partner remuneration through a Hindu undivided family is not salary for standard deduction purposes under income tax law.

Salary paid by a firm to a partner representing a Hindu undivided family is not assessable as salary in the partner's individual capacity for standard deduction under section 16(i) of the Income-tax Act, 1961. A Hindu undivided family is not a legal entity capable of entering into a contract of employment with the firm, and where the partner represents the family, amounts described as salary are treated as part of the partner's share of profits rather than remuneration from a master-servant relationship. Standard deduction is therefore not available.

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Issues: Whether salary paid by a firm to a partner representing a Hindu undivided family can be treated as salary in the partner's individual capacity so as to attract standard deduction under section 16(i) of the Income-tax Act, 1961.

Analysis: The partnership remuneration was claimed to be assessable as salary in the hands of the individual partner, but the governing principle is that a Hindu undivided family is not a legal entity capable of entering into a contract of employment with the firm. Where the partner represents the family in the firm, amounts described as salary are treated as part of the partner's share of profits and not as remuneration arising from a master and servant relationship. On that basis, standard deduction is not available.

Conclusion: The assessee was not entitled to standard deduction under section 16(i) of the Income-tax Act, 1961, and the issue is answered against the assessee and in favour of the Revenue.

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