CIT v. R.M. Chidambaram

106 ITR 292Supreme Court of India1977#3241 most cited

What is CIT v. R.M. Chidambaram authority for?

Salary paid to a partner is merely a mode of sharing profits and retains the character of the firm's income. The payment is an adjustment of the amount the partner is entitled to receive based on their contribution of human capital, skill, and toil.

36

judgments rely on this decision, according to BharatTax’s citation analysis of 366,459 Indian tax judgments — from 2015 to 2025.

Also referred to as

CIT v. R.M. Chidambaram · salary to partner · sharing profits · business income · partnership law · income tax act · human capital · sweat equity · adjustment of amount

Sections most often in play

Section 80-ICSection 10(2A)Section 143(3)Section 143(3A)Section 143(3B)Section 2(29BA)(a)Section 263Section 28(v)

Issues it is cited on

section 28(v)construction pesection 40(b)penalty under section 271dsection 269tsection 269sdomestic companysection 273section 269sssection 273bsection 271dsection 48

Judgments citing CIT v. R.M. Chidambaram

M/S. Sankalp, Bhubaneswar vs. DCIT, Circle-4(1), Bhubaneswar

In the result, appeals of the assessee are partly allowed

ITA 415/CTK/2018[2015-16]Status: DisposedITAT Cuttack19 Oct 2020AY 2015-16

Bench: Shri Chandra Mohan Garg & Laxmi Prasad Sahuassessment Year : 2015-16 Assessment Year : 2016-17

For Appellant: Shri Bibek Mohanty, ARFor Respondent: Shri Subhendu Dutta, DR
Section 14(2)Section 143(3)Section 14ASection 14A(2)

…-tax Act to change or alter the basic law governing partnership. Interest or salary paid to partners remains distribution of business income. 11.3 Relevant here to refer to decision of Hon’ble Supreme Court in the case of CIT vs. R.M. Chimbaram Pillai (1977) 106 ITR 292(SC) relied upon by the Assessee. Supreme Court has held in the case of R.M. Chidambaram Pillai, etc. (supra) held that: "A firm is not a legal person, even though it has some attributes of personality. In Income-tax law, a firm is a unit of assessment, by special provisions, but it is not a full person. Since a contract of employment requires t…

M/S. Shree Sai Enterprises, Bhubaneswar vs. Addl. CIT, Range-4, Bhubaneswar

In the result, appeal of the assessee is allowed

ITA 290/CTK/2018[2014-15]Status: DisposedITAT Cuttack23 Aug 2019AY 2014-15

Bench: Shri Chandra Mohan Gargassessment Year: 2014-2015

For Appellant: Shri N.R.BiswalFor Respondent: Shri Subhendu Dutta, DR
Section 156Section 269SSection 271D

…Therefore, notice of demand is not a valid notice of demand, therefore, imposition of penalty is null and void without service of notice of demand. Placing reliance on the decision of Hon’ble Supreme Court in the case of CIT vs. R.M.Chidambaram Pillai(1977) 106 ITR 292 (SC) and the decision of Hon’ble Delhi High Court in the case of M/s. Muthoot Financiers (supra), ld A.R. submitted that the loans from partners cannot be treated as cash loans in violation of section 269SS of the Act, which does not attract penalty. 11. Drawing my attention towards CBDT Circular No.09/DV/2016 dated 26th April, 2016, ld A.R.…

City Wines, New Delhi vs. ACIT, Circle-55(1), New Delhi

In the result, the appeal filed by the assessee is accordingly allowed for statistical purpose

ITA 421/DEL/2019[2015-16]Status: DisposedITAT Delhi09 Jul 2019AY 2015-16

Bench: Sh. R. K. Pandaassessment Year: 2014-15 M/S. City Wines Acit D-112, Vivek Vihar, Vs Circle – 55 (1) New Delhi-110095 New Delhi Pan No. Aahfc9504A (Appellant) (Respondent)

Section 143Section 40Section 40ASection 40A(3)

…IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2014-15 M/s. City Wines ACIT D-112, Vivek Vihar, Vs Circle – 55 (1) New Delhi-110095 New Delhi PAN No. AAHFC9504A (APPELLANT) (RESPONDENT) Appellant by Sh. Rakesh Dubey, Advocate Respondent by Shri S. L. Anuragi, Sr. DR Date of hearing: 02/07/2019 Date of Pronouncement: 09/07/2019 ORDER PER R.K. PANDA, AM: This appeal filed by the assessee is directed against the order dated 14.09.2018 of the CIT(A)-19, New Delhi relating to A. Y. 2015-16. 2. The assessee in its various ground of ap…

M/S. R. Kumar Plus, Ahmedabad vs. The Income Tax Officer, Ward-5(2)(4), Ahmedabad

In the result, both the appeals of the assessee are allowed

ITA 2772/AHD/2016[2013-14]Status: DisposedITAT Ahmedabad18 Sept 2018AY 2013-14

Bench: Shri Rajpal Yadav & Shri Waseem Ahmedआयकर अपील सं./Ita Nos.2771 & 2772/Ahd/2016 "नधा"रण वष"/Asstt. Years: 2013-2014 & 2014-2015

For Appellant: Shri G.C. Pipara, ARFor Respondent: Shri Kamlesh Makwana, Sr.DR
Section 10(34)Section 14A

…-tax Act to change or alter the basic law governing partnership. Interest or salary paid to partners remains distribution of business income. 11.3 Relevant here to refer to decision of Hon'ble Supreme Court in the case of CIT vs. R.M. Chimbaram Pillai (1977) 106 ITR 292(SC) relied upon by the Assessee. Supreme Court has held in the case of R.M. Chidambaram Pillai, etc. (supra) held that: ITA nos.2771-2772/Ahd/2016 Asstt. Years 2013-14 & 2014-15 8 "A firm is not a legal person, even though it has some attributes of personality. In Income-tax law, a firm is a unit of assessment, by special provisions, but it is…

M/S. R. Kumar, Ahmedabad vs. The Income Tax Officer, Ward-5(2)(4), Ahmedabad

In the result, both the appeals of the assessee are allowed

ITA 2771/AHD/2016[2013-14]Status: DisposedITAT Ahmedabad18 Sept 2018AY 2013-14

Bench: Shri Rajpal Yadav & Shri Waseem Ahmedआयकर अपील सं./Ita Nos.2771 & 2772/Ahd/2016 "नधा"रण वष"/Asstt. Years: 2013-2014 & 2014-2015

For Appellant: Shri G.C. Pipara, ARFor Respondent: Shri Kamlesh Makwana, Sr.DR
Section 10(34)Section 14A

…-tax Act to change or alter the basic law governing partnership. Interest or salary paid to partners remains distribution of business income. 11.3 Relevant here to refer to decision of Hon'ble Supreme Court in the case of CIT vs. R.M. Chimbaram Pillai (1977) 106 ITR 292(SC) relied upon by the Assessee. Supreme Court has held in the case of R.M. Chidambaram Pillai, etc. (supra) held that: ITA nos.2771-2772/Ahd/2016 Asstt. Years 2013-14 & 2014-15 8 "A firm is not a legal person, even though it has some attributes of personality. In Income-tax law, a firm is a unit of assessment, by special provisions, but it is…

Bala Reddy Gopu, Hyderabad vs. DCIT, Circle-2(1), Hyderabad

In the result, appeal of the assessee is allowed for statistical purposes

ITA 455/HYD/2017[2010-11]Status: DisposedITAT Hyderabad12 Jan 2018AY 2010-11

Bench: Shri D. Manmohan & Shri S. Rifaur Rahman

For Appellant: Shri P. Murali Mohan RaoFor Respondent: Shri V. Sreekar
Section 143(1)Section 143(2)Section 145Section 14ASection 17(1)(iv)Section 192Section 194HSection 44A

…h, similar claim was reiterated and relied on the decisions of Hon’ble Supreme Court in the case of CIT Vs. Pramod Kumar Jain [1995] 80 Taxmann 333 (Raj.) and the decision of Hon’ble High court of Rajastan in the case of CIT Vs. R.M. Chidambaram Pillai [1977] 106 ITR 292 (SC). The same was forwarded to AO vide letter dated 03/03/2016 to submit report and also to submit a report on disallowance u/s 14A of the Act, as the CIT(A) had noticed that assessee has earned exempt income. AO submitted remand report dated 16/08/2016 and the AO had reiterated the factual report submitted on 23/12/2015 and distinguished the ca…

Smt Anita Hati, Kolkata vs. JCIT, RG-1, Kolkata, Hooghly

In the result, the appeal of the assessee is allowed

ITA 921/KOL/2015[2009-2010]Status: DisposedITAT Kolkata20 Sept 2017AY 2009-2010
Section 269SSection 269TSection 271E

…irm exchange (Cinema) 2008, 304 ITR 172 (Raj) where the partnership firm had accepted cash deposits from its partners in the genuine bonafide belief that it was not different from them. Tribunal deleted penalty following CIT vs R.M. Chidambaram Pittars (1977) 106 ITR 292 (SC) holding that there cannot be a contract of service between firm and one of its partner applied if for purpose of section 269SS & 269T. It was held that firm is not a juristic person and it can be doubted that assessee has acted bona fide in belief that transactions between firm and partners cannot be governed by section 269SS & 269T. In view…

Smt Parinita Hati Chowdhury, Kolkata vs. JCIT, RG-1, Hooghly

In the result, the appeal of the assessee is treated as allowed

ITA 920/KOL/2015[2009-2010]Status: DisposedITAT Kolkata20 Sept 2017AY 2009-2010

Bench: Shri P.M. Jagtap, Am & Shri S.S. Viswanethra Ravi, Jm] I.T.A. No. 920/Kol/2015 Assessment Year: 2009-10 Smt. Parinita Hati Chowdhury.............................……………………………………………Appellant C/O. V.N. Purohit & Co. Chartered Accountants, Diamond Chambers Unit Iii, 4Th Floor, Suit No. 4G 4, Chowringhee Lane Kolkata - 700016 [Pan : Adlpr2179P] J.C.I.T., Range-1………………………………………………................................................Respondent Aayakar Bhawan, Khadinamore G.T. Road, P.O. Chinsurah Hooghly - 712101 Appearances By: Shri V.N. Purohit, Fca Appearing On Behalf Of The Assessee. Shri Kalyan Nath, Addl. Cit Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : September 11, 2017 Date Of Pronouncing The Order : September 20, 2017 Order Per P.M. Jagtap, Am This Appeal Filed By The Assessee Is Directed Against The Order Of Ld. Cit (Appeals) – 6, Kolkata Dated 10.03.2015 Whereby He Confirmed The Penalty Of Rs. 53,000/- Imposed By The Ao Under Section 271E Of The Income Tax Act, 1961. 2. The Assessee In The Present Case Is An Individual Who Is Partner In The Partnership Firm Of M/S. S. Hati. As Noticed By The Ao During The Course Of Assessment Proceedings Of The Said Firm For A.Y. 2009-10, Loan Of Rs. 53,000/- Taken By The Assessee From The Said Firm Was Repaid In Cash. Since There Was A Violation Of Section 269T Of The Act

Section 269SSection 269TSection 271E

…irm exchange (Cinema) 2008, 304 ITR 172 (Raj) where the partnership firm had accepted cash deposits from its partners in the genuine bonafide belief that it was not different from them. Tribunal deleted penalty following CIT vs R.M. Chidambaram Pittars (1977) 106 ITR 292 (SC) holding that there cannot be a contract of service between firm and one of its partner applied if for purpose of section 269SS & 269T. It was held that firm is not a juristic person and it can be doubted that assessee has acted bona fide in belief that transactions between firm and partners cannot be governed by section 269SS & 269T. In view…

D. K. Enterprise, Hooghly vs. JCIT, RG-1, Bwn, Burdwan

In the result, both the appeals of revenue are dismissed and that of assessee is allowed

ITA 849/KOL/2014[2010-2011]Status: DisposedITAT Kolkata14 Jul 2017AY 2010-2011

Bench: "ी ऐ. ट". वक", "यायीक सद"य एवं/And "ी एम. बालगनेश, लेखा सद"य) [Before Shri A. T. Varkey, Jm & Shri M. Balaganesh, Am]

Section 269SSection 271D

…n ITA No.1916/Kol/2004 and taking note of the decision of the Hon’ble Rajasthan High Court in CIT Vs. Lokhpat Film Exchange (cinema) (2008) 304 ITR 172 (Raj) and the Hon’ble Supreme Court’s decision in CIT Vs. R. M. Chidambaram Pillai 1977 CTR (SC) 71, (1977) 106 ITR 292 (SC) was pleased to delete the addition on the ground that payment of the amount by a partner to a firm is the payment to self and does not partake the character of loan or deposit in general law, therefore, according to the Ld. CIT(A), the provisions of section 269SS of the Act are not applicable to the facts of the case and so he was of the con…

ITO, WD-1(3), Burdwan vs. M/S D. K. Enterprise, Burdwan

In the result, both the appeals of revenue are dismissed and that of assessee is allowed

ITA 1347/KOL/2014[2010-2011]Status: DisposedITAT Kolkata14 Jul 2017AY 2010-2011

Bench: "ी ऐ. ट". वक", "यायीक सद"य एवं/And "ी एम. बालगनेश, लेखा सद"य) [Before Shri A. T. Varkey, Jm & Shri M. Balaganesh, Am]

Section 269SSection 271D

…n ITA No.1916/Kol/2004 and taking note of the decision of the Hon’ble Rajasthan High Court in CIT Vs. Lokhpat Film Exchange (cinema) (2008) 304 ITR 172 (Raj) and the Hon’ble Supreme Court’s decision in CIT Vs. R. M. Chidambaram Pillai 1977 CTR (SC) 71, (1977) 106 ITR 292 (SC) was pleased to delete the addition on the ground that payment of the amount by a partner to a firm is the payment to self and does not partake the character of loan or deposit in general law, therefore, according to the Ld. CIT(A), the provisions of section 269SS of the Act are not applicable to the facts of the case and so he was of the con…

ITO, WD-1(3), Burdwan vs. M/S D. K. Enterprise, Burdwan

In the result, both the appeals of revenue are dismissed and that of assessee is allowed

ITA 1346/KOL/2014[2010-2011]Status: DisposedITAT Kolkata14 Jul 2017AY 2010-2011

Bench: "ी ऐ. ट". वक", "यायीक सद"य एवं/And "ी एम. बालगनेश, लेखा सद"य) [Before Shri A. T. Varkey, Jm & Shri M. Balaganesh, Am]

Section 269SSection 271D

…n ITA No.1916/Kol/2004 and taking note of the decision of the Hon’ble Rajasthan High Court in CIT Vs. Lokhpat Film Exchange (cinema) (2008) 304 ITR 172 (Raj) and the Hon’ble Supreme Court’s decision in CIT Vs. R. M. Chidambaram Pillai 1977 CTR (SC) 71, (1977) 106 ITR 292 (SC) was pleased to delete the addition on the ground that payment of the amount by a partner to a firm is the payment to self and does not partake the character of loan or deposit in general law, therefore, according to the Ld. CIT(A), the provisions of section 269SS of the Act are not applicable to the facts of the case and so he was of the con…

Syntholab Chemicals & Research, Mumbai vs. Asst CIT 18(3), Mumbai

ITA 4156/MUM/2015[2012-13]Status: DisposedITAT Mumbai19 Apr 2017AY 2012-13

Bench: S/Shri Rajendra & Ram Lal Negiआयकर अपील अपील संसंसंसं./I.T.A./4156/Mum/2015, िनधा"रण िनधा"रण वष" वष" /Assessment Year: 2012-13 आयकर आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S. Syntholab Chemicals & Research Acit, -18(3) Office No.13 & 20, Ground Floor, Earnest House, Nariman Point Bhangwadi Shopping Arcade, Vs. Mumbai-400 021. Kalbadevi Road,Mumbai- 400 002. Pan:Aaacp 2682 G (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri Vishwas Mundhe-Dr Assessee By: Shri B.V. Jhaveri-Ar सुनवाई क" तारीख /Date Of Hearing: 15.03.2017 घोषणा क" तारीख / Date Of Pronouncement:19.04.2017 आयकर अिधिनयम अिधिनयम,1961 क" क" धारा धारा 254(1)केकेकेके अ"तग"त अ"तग"त आदेश आदेश आयकर आयकर आयकर अिधिनयम अिधिनयम क" क" धारा धारा अ"तग"त अ"तग"त आदेश आदेश Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार/ Per Rajendra, Am- लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging The Order Dated 11/05/2015,Of Cit (A)-29,Mumbai The Assessee Has Filed The Present Appeal.Assessee-Firm,Engaged In The Business Of Manufacturing Of Bulk Drugs & Intermediates, Filed Its Return Of Income On 29/09/2012,Declaring Total Income Of Rs. 1.58 Crore.The Assessing Officer(Ao)Completed The Assessment U/S.143(3)Of The Act,On30/01/2015,Determining Its Income At Rs.2,00,12,590/-.During The Course Of Hearing Before Us,Grounds 2,4,5,6 & 8 Were Not Pressed. Hence, Same Stands Dismissed,As Not Pressed.

For Appellant: Shri B.V. Jhaveri-ARFor Respondent: Shri Vishwas Mundhe-DR
Section 10Section 143(3)Section 14ASection 254(1)Section 28

…of Sudhir Kapadia (ITA/7888/Mumbai/2003, dated 26/02/2007), Sudhir Dattaram Pathe(2SOT678),Bharat S Raut(ITA/9212/Mumbai/2004, dated 25/06/2008) Bihari Lal Aggarwal (ITA/1816/Kol/2009, dated 07/01/2011). It also referred to the case of RM Chidambaram Pillai (106 ITR 292) and further argued that it had interest-free funds in form of capital of the partners, amounting to Rs.7.02 crores, that the investment in shares was made out of the interest refunds, that no expenditure was incurred to make investment in the shares, that no the expenditure was incurred for making investment in shares, that no expenditure was de…

ITO, Ward-3(1), Asansol vs. M/S Ranjit Jewellers, Asansol

In the result, the appeal of the revenue is dismissed

ITA 2425/KOL/2013[2008-09]Status: DisposedITAT Kolkata14 Dec 2016AY 2008-09
Section 143(3)Section 269SSection 269TSection 271DSection 271E

…pt this explanation and rejected the plea of the assessee and imposed penalties under ss. 271D and 271E. The penalties were not sustained by the CIT(A). 3. The Tribunal relying on a decision in CIT vs. R.M. Chidambaram Pillai, etc. 1977 CTR (SC) 71 : (1977) 106 ITR 292 (SC) wherein the Supreme Court has said that there cannot be a contract of service, in strict law, between a firm and one of its partners so as to consider the salary paid to the partner as income from salary held that for the purpose of ss. 269SS and 269T also the firm and partners cannot be considered to be separate entity and deleted the penal…

Pahilajrai Jaikishan, Mumbai vs. DCIT 19(3), Mumbai

In the result, the appeal is allowed

ITA 994/MUM/2014[2010-11]Status: DisposedITAT Mumbai01 Feb 2016AY 2010-11

Bench: Shri Shailendra Kumar Yadav & Shri Ramit Kocharआयकर अपील सं./I.T.A. No.1562/Mum/2014 ("नधा"रण वष" / Assessment Year: 2010-11)

Section 14Section 143(2)Section 143(3)Section 14ASection 37(1)Section 40

…ncome which does not form part of the total income of the taxpayer. We have observed that the assessee firm has relied upon following case laws: a) CIT v. Walfort Share & Stock Brokers Private Limited(20100 326 ITR 1(SC) b) CIT v. R M Chidambaram Pillai (1977)106 ITR 292(SC) c) Nectar Beverages Private Limited v. DCIT(2009) 314 ITR 314 d) Vishnu Anant Mahajan v. ACIT in ITA no 3002/Ahd/2009(Ahd.-SB)- (2012) 22 taxmann.com 88 e) Maxopp Investments Limited & Ors. V. CIT (2012) 247 CTR 162(Del.) f) Kodak India Private Limited v. Addl. CIT (ITA No 7349/Mum/2012) g) ACIT v. SIL Investment Limited(2012) 50 SOT 54(Del.)…

Asst CIT 19(3), Mumbai vs. Pahilajrai Jaikishin, Mumbai

In the result, the appeal is allowed

ITA 1562/MUM/2014[2010-11]Status: DisposedITAT Mumbai01 Feb 2016AY 2010-11

Bench: Shri Shailendra Kumar Yadav & Shri Ramit Kocharआयकर अपील सं./I.T.A. No.1562/Mum/2014 ("नधा"रण वष" / Assessment Year: 2010-11)

Section 14Section 143(2)Section 143(3)Section 14ASection 37(1)Section 40

…ncome which does not form part of the total income of the taxpayer. We have observed that the assessee firm has relied upon following case laws: a) CIT v. Walfort Share & Stock Brokers Private Limited(20100 326 ITR 1(SC) b) CIT v. R M Chidambaram Pillai (1977)106 ITR 292(SC) c) Nectar Beverages Private Limited v. DCIT(2009) 314 ITR 314 d) Vishnu Anant Mahajan v. ACIT in ITA no 3002/Ahd/2009(Ahd.-SB)- (2012) 22 taxmann.com 88 e) Maxopp Investments Limited & Ors. V. CIT (2012) 247 CTR 162(Del.) f) Kodak India Private Limited v. Addl. CIT (ITA No 7349/Mum/2012) g) ACIT v. SIL Investment Limited(2012) 50 SOT 54(Del.)…

DCIT 10(1), Mumbai vs. Rajmundra Real Estate P.Ltd, Mumbai

The appeal of the revenue is hereby dismissed

ITA 1946/MUM/2013[2009-10]Status: DisposedITAT Mumbai16 Dec 2015AY 2009-10

Bench: S/Shri N.K.Billaiya & Amarjit Singhआयकर अपील सं/ I.T.A. No.1946/Mum/2013 ("नधा"रण वष" / Assessment Year: 2009-10) The Dcit 10(1) M/S. Rajmundra Real Estate बनाम/ 455, Aayakar Bhavan, Pvt. Ltd. Vs. 4Th Floor, M.K.Marg, 1858-34, Khernagar, Mumbai - 400020 Near P.F.Office, Bandra(E), Mumbai - 400051 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaccd1807B (अपीलाथ" /Appellant) .. (""यथ" / Respondent)

For Appellant: Shri K. Gopal & Shri JitendraFor Respondent: Shri Anilkumar Dhondial
Section 14A

…g capital has to be allowed as deduction in the hands of the assessee. In respect of the nature of the share in the profits of a firm, in the hands of the partner, the Supreme Court has considered the issue in the case of CIT, Madras vs. RM Chidambaram Pillai 106 ITR 292. The court was examining the nature of share of profits received by a 3 Assessment Year: 2009-10 partner. The court held that a firm is not a legal person even though it has some attributes of personality. In Income Tax Law a firm is a unit of assessment, by Special Provisions, but is not a full person. Since a contract of employment requires two…