TaxTMI 
TaxTMI 
2001 (12) TMI 59
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....s from 1978-79 to 1980-81. Besides the share in the profits, he had also drawn salary from the firm. In respect of salary, a claim for deduction under section 16(i) was made. This claim was accepted by the Income-tax Officer. However, on July 14, 1983, the Assessing Officer passed an order under section 154 and disallowed the claim for deduction. The assessee filed an appeal. It was dismissed. He approached the Tribunal. The assessee having succeeded, the Revenue filed three petitions under section 256(1). These petitions were accepted. The Tribunal has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the assessee is entitled to standard deduction under section 16(....
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....aced reliance on the provision of section 67 of the Act. On the basis of this provision, the Tribunal took the view that "a partner can draw salary from the firm in which he is a partner." By referring to the decision of the Madras High Court in Commr. of Agrl. I.T.v. Tipperary Estates Company [1970] 76 ITR 396, the Tribunal held that "a part ner of a firm is entitled to salary for rendering the services to the firm and in case a person draws salary he is entitled to the statutory deduction under section 16 of the Act..." It appears that even the Bombay Bench of the Tribunal had taken a similar view in Mohammed Ibrahim Shahdad v. ITO [1980] 18 CTR (Trib.) 3. Is this view correct? Section 67 of the Act lays down the method of computing a pa....
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....s allowable from the income which is chargeable under the head of 'Salary'. In the case of a partner, the income which is received by way of salary is of the same character as income from business." This view was reiterated by the Madras High Court in N.S.M. Sankara pandian's case [1996] 222 ITR 289. The concept of "salary" goes back to the days of the Roman Empire. The soldiers were given "Sal" (salt) as a reward for their services. With the passage of time, the mode has changed from salt to money. However, "salary", in its conceptual and legal sense, remains a reward for services rendered. The partners in a firm work for themselves. Not for any employer. They serve themselves. Not anybody else. They are nobody's servants. They are t....