THE COMMISSIONER OF INCOME TAX vs. M/S DEVANAND AUTOMOBILES

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ITA/180/2007HC KarnatakaKAHC03003395200723 January 2013Bench: N.KUMAR,H.G.RAMESH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that remuneration paid to an individual who is a working partner, even if representing a HUF in the partnership, is deductible. The term 'individual' in Explanation 4 includes such representatives.

What were the facts?

The revenue appealed against the Tribunal's order which upheld the deduction of remuneration paid to a working partner. This issue had been previously decided by the High Court in similar cases.

What were the issues?

Whether remuneration paid to a working partner, who is an individual representing a HUF in a partnership firm, is deductible.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

I.T.A.No.180/2007 - 1 - IN THE HIGH COURT OF KARNATAKA CIRCUIT BENCH AT GULBARGA DATED THIS THE 23RD DAY OF JANUARY 2013 PRESENT THE HON’BLE MR. JUSTICE N.KUMAR AND THE HON’BLE MR. JUSTICE H.G.RAMESH I.T.A. No.180/2007 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX GULBARGA 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1 GULBARGA ... APPELLANTS (BY SRI AMEET KUMAR DESHPANDE, ADV.) AND: M/S. DEVANAND AUTOMOBILES (BIJAPUR) HEAD OFFICE, GULBARGA ...RESPONDENT (SEVED & UNREPRESENTED)) THIS APPEAL IS FILED U/S 260-A OF I.T ACT, 1961 ARISING OUT OF ORDER DATED: 11.08.2006 PASSED IN ITA 1652/BANG/2005 FOR THE ASSESSMENT YEAR 2002-2003, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND ETC. THIS APPEAL COMING ON FOR HEARING THIS DAY N.KUMAR J., DELIVERED THE FOLLOWING:

I.T.A.No.180/2007 - 2 - J U D G M E N T The revenue has preferred this appeal challenging the order passed by the Tribunal which has upheld the order of the Appellate Authority granting deduction to the amount paid towards a working partner. In fact, this question arose for consideration before this Court in the case of the Commissioner of Income Tax & Another vs. M/s.Devanand Automobiles in ITA No.389/2007 and other connected matters where after reviewing the entire case law it was held that a remuneration paid to the individual partner who was admittedly a working partner, who was representing HUF in the partnership firm, is deductible. The word “individual” used in Explanation 4 includes that, individual who may be a karta or a member of the HUF who is representing HUF in the partnership firm. If that individual satisfy the requirement of a working partner then the remuneration paid to such working partner is deductible. In that view of the matter, there is no merit in this appeal. The

I.T.A.No.180/2007 - 3 - substantial questions of law are answered in favour of the assessee and against the revenue. Appeal dismissed. Sd/- JUDGE Sd/- JUDGE hkh.

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