Karta remuneration deduction upheld where payment reflected genuine services, reasonableness, and commercial expediency.

Remuneration paid by a Hindu undivided family to its karta for managing the family business and safeguarding partnership interests was treated as deductible business expenditure where the payment reflected services actually rendered, was entered in the family accounts, and was found to be reasonable. The allowance was supported by commercial expediency because the karta was compensating the family's own business operations and its represented interests in partnership concerns. On those facts, the deduction was considered allowable and the disallowance unjustified.

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Issues: Whether remuneration paid by a Hindu undivided family to its karta for looking after the family's business and partnership interests was deductible as a business expenditure.

Analysis: The remuneration was paid to the karta for managing the family's own business and for safeguarding the family's interests in the partnership concerns in which the family was represented through the karta. The payment was reflected in the family accounts, indicating an arrangement to compensate the karta for services actually rendered. The amount was found to be reasonable and not excessive. On these facts, the expenditure was treated as incurred for business purposes and supported by commercial expediency.

Conclusion: The deduction was allowable and the disallowance was unjustified.

Ratio Decidendi: Remuneration paid by a Hindu undivided family to its karta for genuine services rendered in managing the family business and protecting its partnership interests is deductible if it is reasonable and incurred on grounds of commercial expediency.

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