1983 (6) TMI 81

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....income. The ITO, however, disallowed the claim in all the cases on the ground that if the partner renders any services to the firm he can either put in special service for which he should be compensated by the firm or the normal service of a partner for which no special payment is designated; that apart from such work which the partner may do for the firm there appears to be no other work the partner can do either for the firm of for the HUF. The ITO concluded that there is no justification to hold that the kartha is entitled to any remuneration for looking after the family interest in the firm. 2. The various assessees appealed. The AAC, who dealt with the issue in ITA Nos. 1111 & 1112/81-82 in the case of Sri P. Balasubramanian (vide h....

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....he similar point (referred to in the former) has been accepted by the department. The ld. counsel for the assessee also made reference to the Madras High Court decision in (1970) 75 ITR 109 (CIT vs. S.A.P. (Mad) (Annamalai) and the Allahabad High Court decision in (1977) 108 ITR 818 (All) CIT vs. Raghunanan Saran). The department on the other hand relied on the orders of the AAC and it was submitted that regarding any service rendered to the firm by the Kartha the firm should compensate the Kartha and the HUF was not obliged to do so. On a careful consideration of the rival submissions we find considerable merit in the assessee's contention. The details of the salary payments claimed as deduction are given below. Name of the assessee ....

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....15,000 P. Kumaresan 9,000 9,000 9,000 12,000 15,000 15,000 P. Balasubramanian 9,000 9,000 9,000 12,000 15,000 15,000 As stated earlier, the assessee also relies on the AAC's order in the case of one of the assessee HUF's viz., Sri P. Kumaresan, in which the AAC had allowed a similar claim. No material has been placed before us to justify any departure from the past practice of allowing such salary payments to the Kartha of the HUF as a deduction in computing the HUF's share income. It may be noted from the details extracted above that all the Karthas in question had considerable experience in the line of business and their specialised knowledge and skill would have enabled them to render effectiv....