Commissioner of Income Tax vs K.V. Ramalingam Chettiar

N.V. Balasubramanian, J.—One K. V. Ramalingam Chettiar, now deceased, was an assessee and he was a partner in a firm by name K.

Vela-yutham Chettiar Sons and Co., in the status of a Hindu undivided family. The assessee claimed during the course of-assessment year 1981-

82 that a sum of Rs. 22,000 received by him should be assessed in his individual capacity and he also claimed standard deduction u/s 16(i) of the

Income Tax Act, 1961, since the assessee has received salary from the firm in the status of an individual. The Income Tax Officer, however,

rejected the claim of the assessee for allowance of standard deduction on the ground that there was no master and servant relationship between the

assessee and the firm. The Appellate Assistant Commissioner as well as the Appellate Tribunal upheld the claim of the assessee and held that the

assessee was entitled to standard deduction u/s 16(i) of the Income Tax Act. The Revenue has challenged the order of the Appellate Tribunal. It

seems that after the disposal of the appeal K. V. Ramalingam Chettiar, the assessee passed away and his daughter, K. V. R. Malaimmal, was

brought on record as his legal heir, during the course of the proceedings before the Appellate Tribunal. A notice of the hearing of the tax case

petition was served on the legal heir of the deceased assessee on February 30, 1990. There was no representation on behalf of the respondent-

assessee today. Her name was also called even then, there was no representation.

Mr. C. V. Rajan, learned counsel appearing for the Revenue, brought to the notice of this court the decision of this court reported in

Commissioner of Income Tax Vs. N.S.M. Sankarapandian, wherein this court was dealing with a case of the assessee who was the ""karta"" of the

Hindu undivided family, and he represented the Hindu undivided family in the partnership firm. This court held that since the Hindu undivided family

is not a legal entity, it cannot enter into a contract with the firm for payment of salary and where certain amounts were paid as salary this court held

that the amounts paid by the firm to the partner should be deemed to be the share of profits assessable in his individual capacity and standard

deduction is not available on such salary. The decision of Commissioner of Income Tax Vs. N.S.M. Sankarapandian, will squarely apply to the

facts of this case and following the above cited case, we hold that the Tribunal was not correct in holding that the assessee is entitled to standard

deduction u/s 16(i) of the Income Tax Act, 1961.

Accordingly, we answer the question of law referred to us in the negative and in favour of the Revenue. However, there will be no order as to

costs.