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Section 40(b) of the Income-tax Act, 1961 - Business disallowance - Interest, salary, etc., paid by firm to partner - Assessment years 1979-80 and 1981-82 - Though P was partner in assessee-firm representing his HUF, certain sums paid as commission to P in his individual capacity were added to taxable income of firm under section 40(b) - Whether such addition in taxable income of firm was justified - Held, no FACTS One P was partner in the assessee-firm representing his HUF. For the assessment years 1979-80 and 1981-82 certain sums were paid to P in his individual capacity as commission. The Assessing Officer added the amounts to the taxable income of the firm under section 40(b) . On reference: HELD In a partnership, HUF acts through its karta. That does not make karta a partner. He shares the profits and losses of the firm for and on behalf of the HUF. As an individual, the karta can be separately assessed. The legislative intention of making a distinction between an individual and a karta of a joint family is very clear. The expression 'individual' does not encompass in its meaning karta of a joint family, who acts in a representative capacity. Therefore, the commission paid by the assessee-firm to P was not to be disallowed under section 40(b). CASE REVIEW CIT v. Pannalal Hiralal and Co.[1984] 146 ITR 549 (Bom.); Chhotalal and Co. v. CIT[1984] 150 ITR 276 (Guj.) [FB]; N.T.R. Estate v. CIT[1986] 157 ITR 285 (AP); CIT v. Narbharam Popatbhai and Sons[1987] 166 ITR 534 (MP) [FB]; Gajanand Poonam Chand and Bros. v. CIT[1988] 174 ITR 346 (Raj.) and CIT v. Kishanlal & Bros.[1988] 174 ITR 728 (Raj.) followed and relied upon. A.S.K. Ratnaswamy Nadar Firm v. CIT[1965] 58 ITR 312 (Mad.); Giridharilal Ghasiram v.CIT[1968] 69 ITR 890 (Cal.); Pannalal girdharilal v. CIT[1971] 81 ITR 624 (Delhi); N.M. Annaiah and Co. v. CIT[1975] 101 ITR 348 (Kar.); CIT v. London Machinery Co.[1979] 117 ITR 111 (All.);K.C. Raj and Co. v. CIT[1980] 121 ITR 911 (Delhi); Dwarkadas Rameshwar Goenka v. CIT[1981] 127 ITR 397 (Mad.); Sanghi Motors v. CIT[1982] 135 ITR 359 (Delhi); Chandmul Rajgharhia v.CIT[1987] 164 ITR 486 (Patna); CIT v. Hari Nath & Co.[1987] 168 ITR 440 (All.) and CIT…

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