GURUNATH Vs. CIT

JUDGEMENT

(1.) THE assessment year under reference is 1960-61, the relevant previous year being the year ended October 3,1959. THE assessee is a Hindu Family. It was carrying on a business. For services rendered in carrying on the said business, one of the members of the Hindu undivided family, shri. G. V. Dhakappa, was paid remuneration at the rate of Rs. 500 p.m. This business was converted into a partnership business. THEre is a deed dated August 26,1957, constituting the said firm and it is annexed hereto as annexure "A" and forms part of the case. THE ten Karta, shri. G. V. Dhakappa, has entered into the agreement of partnership on behalf of the family. Clause 7 of annexure "A" runs as follows :

(2.) FOR the relevant year the firm was registered and the total share of profit allocated under section 23(6) as per the assessment made on the registered firm is Rs. 14,734 which includes Rs. 6,000 being salary payable as per clause 7 extracted above at the rate of Rs. 500 p.m. It was claimed before the Income-tax Officer that a sum of Rs. 6,000 paid to shri G. V. Dhakappa was his individual income and as such it should not be included in the assessment of the Hindu undivided family under consideration. This claim was rejected by the Income-tax Officer observing as follows :

(3.) ON further appeal to the Tribunal it was contended that the sum of Rs. 6,000 was the individual income of Shri. G. V. Dhakappa. The Tribunal also did not accept the assessee's claim set out in its order (made annexure "D" and forming part of the case) mainly for two reasons :