P NIRMAL RAO Vs. COMMNR OF INCOME TAX

JUDGEMENT

(1.) 13. In an application filed by the asessee under Section 256(2) of the Income -tax Act (hereinafter called the 'Act') this Court directed the Tribunal to state a case and refer the question of law arising out of its order for opinion of this Court and the Tribunal has referred the following question for opinion of this Court:

(2.) This case relates to the assessment year 1975 -76. The assessee is a H. U. F. consisting of Katta, his wife and minor children. The assessee is a partner in the firm M/s. P. Laxminarayan and Sons, Berhampur. By virtue of an agreement dated 8. 4. 74 it was agreed that Rs. 750/ - would be paid to the Karta as the salary from the firm for looking after the day -to -day management of the affairs of the firm's business. This claim was disallowed by the Income -tax Officer. In appeal before the Appellate Assistant Commissioner, the order of. the Income -tax Officer was confirmed. Second Appeal was carried to the Tribunal and the Tribunal also dismissed the same. Thereafter an application under Section 255(1) of the Act having been dismissed, this application under Section 256(2) of the Act was filed before this Court to state a case and refer the question of law arising in this case for the opinion of this Court. The Tribunal after considering the agreement and the facts and circumstances of the case in its order of reference has observed.

(3.) In another decision of the Gujarat High Court reported in : [1980]124ITR733(Guj) (Shankarlal H. Dave v. Commissioner of Income -tax, Gujarat -III) it has been held: