Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Assessee, partner in a firm and physically incapable of rendering services to partnership firm, engaged his son on salary to look after assessee's interest in firm - Whether salary paid by assessee to son out of his share income allowable as a deduction - Held, on facts, yes FACTS The assessee, who was partner in a firm and was physically not capable of rendering services to the partnership firm, engaged his son on salary basis to look after his interest in the firm. During the accounting year relevant for the assessment year 1959-60, the assessee paid a sum of Rs. 7,762 to his son out of his share income and claimed the same as an allowable deduction. The ITO, however, disallowed the claim holding that the payment was made for extra commercial consideration. On appeal, the AAC allowed the assessee's claim in toto. On further appeal, the Tribunal allowed half the amount claimed. On reference, the revenue contended that the impugned amount was paid to the assessee's son for rendering services to the partnership business and, therefore, it was not an allowable deduction as far as the assessee was concerned. HELD It is well settled that allowances normally allowed against business income can also be claimed against the shares of a partner in a partnership business. Having regard to the facts and circumstances of the case, the entire sum of Rs. 7,762 could have been allowed as a deduction, but as the assessee had not contested the Tribunal's decision any further, there was no need to disturb the order of the Tribunal. Accordingly, the sum of Rs. 3,636.50 constituted a proper deduction from the assessee's share income from the firm. CASE REVIEW CIT v. A.M. Kaithan[1972] 85 ITR 14 (Mad.), CIT v. Ganpat Rai Jaggi and Co.[1972] 86 ITR 363 (Delhi), CIT v. Ramniklal Kothari[1969] 74 ITR 57 (SC) and CIT v. Sohan Lal Nayyar[1974] 95 ITR 90 (Delhi)followed & relied upon. Basantlal Gupta v. CIT[1963] 50 ITR 541 (Mad.) and Jitmal Bhuramal v. CIT[1962] 44 ITR 887 (SC)distinguished. CASES REFERRED TO CIT v. A.M. Kaithan [1972] 85 ITR 14 (Mad.), CIT v. Ganpat Rai Jaggi and Co. [1972] 86 ITR 363 (Delhi); CIT…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492