B M MEHTA Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE issue involved in all the cases is the tax-ability of the interest earned by a partner of a firm engaged in the manufacture of tea and the salary income of the partner received from that firm.

(2.) ALL the revision petitioners are partners in the same firm. The assessment years in question are 1974-75, 1975-76, 1976-77 and 1980-81.

(3.) IT has been held in more than one case by the apex court that the salary received by a partner of a firm is of the same character as the share of the income from the profits of the partnership. The Supreme Court in the decision reported in CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 292, to which decision the Appellate Tribunal has also adverted, held that salary paid to a partner retains the same character of income of the firm.