Subhash Chand Sood (Huf v. Commissioner Of Income Tax

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITA No. 4003 of 2013 Decided on: 27.06.2013 Subhash Chand Sood (HUF) …Appellant. Versus Commissioner of Income Tax …Respondent. Coram The Hon’ble Mr. Justice A.M. Khanwilkar, Chief Justice. The Hon'ble Mr. Justice Kuldip Singh , Judge. Whether approved for reporting? For the appellant: Mr. Vishal Mohan, Advocate. For the respondent:Mr. Vinay Kuthiala Sr. Advocate with Ms. Vandana Kuthiala, Advocate. A.M. Khanwilkar, C.J.(Oral) Heard counsel for the parties. 2.This appeal takes exception to the judgment of the Tribunal, dated 28[th] January, 2013. The substantial questions of law formulated by the appellant in paragraph 4 are on the assumption that the remuneration received by the coparcener of HUF was in substance one of the modes of return made to the family because of the investment of the family funds. 3.In the facts of the present case, the concurrent finding recorded by the Authorities below is that it cannot be ruled out that the business was carried on without the expertise and personal exertion of the partners. The assessee claims to be partner of 50% and other partner was Ravi Chand Sood having 50% share who was much younger in age to Subhash Chand Sood. On that basis, the Authorities have held that the salary being allowable to a working partner cannot be held to be the salary earned by the assessee (HUF) on account of his capital contribution. 4.This finding of fact will bind the appellant as well as this Court. The decision of the Apex Court pressed into service by the learned counsel for the appellant reported in the case of K.S. Subbiah Pillai versus Commissioner of Income-Tax[1], in our opinion, can be used against the appellant himself. The Court has noted that if the remuneration received by the coparcener was in substance one of the modes of return made to the family because of the investment of the family funds in the business, in that case alone it would be the income of the HUF; whereas if it was the compensation given for the services rendered by the individual coparcener, it ought to be reckoned as the income of the individual and not of the HUF. 5.In the circumstances no interference is warranted. Hence dismissed. (A.M. Khanwilkar) Chief Justice June 27, 2013 ( rajni / vt ) (Kuldip Singh ) Judge