COMMISSIONER OF INCOME TAX Vs. RAIZADA K L

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following question for the opinion of this court at the instance of the Commissioner of Income-tax:

(2.) THE assessee in this case is a Hindu undivided family, of which Shri K.L. Raizada is the karta. Shri K.L. Raizada became a partner in the firm, M/s. Standard & Co., Kanpur, in his capacity as karta of his family. For the assessment year 1961-62 the Standard & Company was assessed off a total income of Rs. 1.61,602. THE assessee's share in the income of the said firm was determined at Rs. 18,843. This amount included a sum of Rs. 12,000 which was payable to Shri K.L. Raizada for working as assistant managing director under the partnership deed of M/s. Standard & Co.

(3.) THE Tribunal ultimately held that the character of the salary paid to P.N. Suri continued to be remuneration paid to Shri K.L. Raizada, partner of the firm. It came to the conclusion that the salary, in the first place, accrued to Shri K.L. Raizada and he in his own turn employed Shri Suri and paid the entire remuneration to him for his services. It held that the salary paid to Shri Suri could be treated as salary paid to Shri K.L. Raizada as partner of M/s. Standard & Co. In the circumstances, the Income-tax Officer was justified in treating the said salary as paid to a partner in the assessment of M/s. Standard & Co. and consequently clubbing it with the share income of Shri K.L. Raizada. It further held that the assessee was entitled to claim the deduction in respect of the amount of Rs. 12,000 paid to Shri P. N. Suri. In the result, it allowed the appeal and directed the deletion of a sum of Rs. 12,000 from the total income of the assessee.