TaxTMI 
TaxTMI 
2003 (4) TMI 236
X X X X Extracts X X X X
X X X X Extracts X X X X
....and material facts for the disposal of the issue involved in the grounds of instant appeal filed by the assessee are that the assessee-firm consisted of six partners including Shri Sat Pal, HUF. It filed its return of income for the asst. yr. 1996-97 declaring nil income. Subsequently it came to the notice of the AO that deduction of Rs. 5,294 has been wrongly claimed by the assessee under s. 40(b) on account of salary paid to Shri Sat Pal, HUF. The AO issued notice under s. 154 to the assessee and in response thereto, the assessee filed a reply dt. 9th Sept., 1997. The AO rejected the explanation filed by the assessee on the reasoning that only an individual who is actively engaged in conducting the business of the firm can be a working pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(A) was of the opinion that the AO was fully justified in rejecting the assessee's explanation and adding back a sum of Rs. 5,294 wrongly claimed under s. 40(b) by carrying out rectification under s. 154 of the IT Act, by observing that the AO had given a finding that the main issue as to whether HUF can be a working partner, was clarified by Expln. 4 to s. 40(b) of IT Act, and so these submissions of the assessee were completely irrelevant and further observing that the assessee's counsel has argued in its written submission that the word 'individual' includes both HUF and individual and nowhere does the Act clearly prohibit payment of remuneration to the Karta of HUF. In this connection, it is worth mentioning that the reverse logic can....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 40(b) of the IT Act, because even in the case of ITO vs. Sain Dass & Co. decided by the Tribunal, Chandigarh Bench, in ITA No. 1472/Chd/1995; Asst. yr. 1993-94, vide its order dt. 12th Dec., 2001, it was held that remuneration paid to a person in HUF capacity cannot be allowed and so the claim of payment of salary by the assessee to Shri Sat Pal in his HUF capacity has been rightly withdrawn by the AO under the provisions of s. 40(b) of the IT Act by carrying out rectification under s. 154 of the IT Act as it was a mistake apparent from record. 2.4 We have considered the submissions of learned Departmental Representative for the Revenue, perused the records and carefully gone through the orders of the tax authorities below. In this case,....