1967 (7) TMI 47

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.... out to the managing partner of the firm is deductible as an expenditure under section 5(e) of the Madras Agricultural Income-tax Act, 1955. The firm consists of nine partners and has been registered under the provisions of the Act. The managing partner held during the assessment year 1963-64 a 2/9th share. In consideration of his services as managing partner of the firm, he was paid a total remun....

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....stow it except for remuneration. But if he had not supervised the agricultural operations of the firm, it would have been necessary to engage a third party for the purpose, in which case salary would have to be paid. The test for an allowance of the expenditure is always whether it has been incurred in the previous year and the expenditure was laid our or incurred wholly and exclusively for the pu....

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....e partners as compared with the share of the sleeping partner. It is a problem to be answered in each case, whether what is sought to be claimed as an allowance is a real expenditure laid out for the purpose of the business, in the instant case for the purpose of the land. If the expenditure, in comparison with the total profits, is excessive or is a device to escape tax, it will obviously be disa....