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of <h1>Tribunal Upholds HUF Partner's Remuneration Decision</h1> The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decision to allow remuneration to the HUF partner under section 40(b) of the Income ... - Issues:Allowance of remuneration to an HUF partner under section 40(b) of the Income Tax Act, 1961.Analysis:1. The appeal by the Revenue challenged the order of the CIT(A) regarding the allowance of remuneration to an HUF partner under section 40(b) of the Income Tax Act, 1961 for the assessment year 1993-94.2. The Assessing Officer (AO) disallowed the remuneration paid to the HUF partner and two lady partners based on specific provisions in Explanation 4 to section 40(b) of the IT Act, 1961, which defines a 'working partner' as an individual actively engaged in the business affairs of the firm.3. The CIT(A) upheld the disallowance of salary for the lady partners but allowed the remuneration paid to the HUF partner, citing legal precedents such as CIT vs. Kalu Babu Lal Chand, Mathura Prasad vs. CIT, CIT vs. K.S. Subbiah Pillai, and D.N. Bhandarkar & Ors. vs. CIT.4. During the appeal hearing, the Revenue contended that the HUF partner's services to the firm were questionable as he was also a partner in three other firms, emphasizing the provisions of Explanation 4 to section 40(b) and challenging the CIT(A)'s decision.5. The assessee's counsel argued that the HUF partner provided services to the firm in his capacity as karta of the HUF, emphasizing that only individuals can be partners, and any inclusion of salary in the HUF's income could be rectified by the Revenue.6. The Tribunal analyzed the facts and found that the HUF partner, despite being involved in other firms, actively contributed to the firm's operations, concluding that he qualified as a working partner under section 40(b), supporting the CIT(A)'s decision to allow the remuneration.7. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the remuneration to the HUF partner based on his active involvement in the firm's affairs as a working partner.
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