MANMOHAN SACHDEVA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) FOR the asst. year 1969 -70, the following question has been referred to us under S. 256(1) of the IT Act, 1961 :

(2.) THE facts of the case are that the assessee is an HUF and the Karta is a partner in a firm, M/s Sant Ram Nikka Mal. The learned counsel has brought to our notice that the question of salary and whether it is to be taxed in the individual hands of the Karta or in the hands of the HUF of which he is the Karta have been decided by us in another reference, being ITR No. 101 of 1972 on July 16, 1980 (Brij Mohan (HUF) vs. CIT (1986) 158 ITR 14 (Del)) but, in that case, the question relating to the salary of Brij Mohan, brother of Manmohan, was involved. It is pointed out that this decision was in favour of the Department and against the assessee and consequently as this case involves the same point, this Court may abstain from deciding the matter at this stage as an appeal in the case of Brij Mohan is pending before the Supreme Court. We have considered various aspects of this case. It is already an old one relating to 1969 -70 and the fact that we have already decided the case of the brother in 1980, makes us feel that we should not hold up the decision till the Supreme Court may decide the matter, which is likely to take some time, as at present advised.

(3.) THE answer to the referred question in the case of the brother was that the increased salary was also taxable in the hands of the HUF and not in the hands of the Karta as individual. On a parity of reasoning, we have to hold that in this case also, the salary has to be taxed in the hands of the assessee family and not in the hands of the Karta. In other words, we answer the question in the affirmative, against the assessee and in favour of the Department, but leave the parties to bear their own costs.