Law:

Section:

Section 28(i) of Income-tax Act, 1961 - Business deduction - Allowable as - Assessment years 1959-60 to 1961-62 - Whether remuneration paid by HUF to karta for carrying on family's business can be allowed as deduction while computing income of HUF whether said remuneration is founded on an agreement or not - Held, yes FACTS For the assessment years 1959-60 to 1961-62, the assessments were in the status of a HUF which consisted of 'A' the karta and his minor son. 'A' was engaged by HUF as an editor of a magazine and was paid remuneration for his services. The revenue disallowed the claim for deduction, but on appeal, the Tribunal accepted the claim. On reference : HELD The contention of revenue that it was the duty of the karta under the Hindu law to carry on the business of the family and do his utmost for furthering the same and, therefore, the remuneration claimed by 'A' and paid by the HUF should be disallowed as a deduction, could not be accepted. In the instant case the other member of the family being a minor, one could not visualise an agreement. But that did not mean that the karta who was carrying on the joint family, business, and particularly the magazine had no power, acting for the joint family to allow salary for his services from the funds of the joint family business. The essence of the matter was the service rendered by the karta to the family in consideration of the remuneration to him, whether it be founded on an agreement or not. No question had been raised at any stage below that the expenditure was not a commercial or business expediency. Therefore, the remuneration paid in each of the years to 'a' could be a deduction in the computation of the HUF's income. Note: The case was decided in favour of assessee. CASES REFERRED TO Jitmal Bhuramal v. CIT [1962] 44 ITR 887 (SC) and Jugal Kishore Baldeo Sahai v. CIT [1967] 63 ITR 238 (SC). JUDGMENT Veeraswami, J.- This reference relates to the assessment years 1959-60 to 1961-62. The assessment was in the status of a Hindu undivided family which consisted of Annamalai, the karta, and his minor son. Annamalai is a Master of Arts and a Law Graduate. He was engaged as an editor of a Tamil magazine by…

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