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In the case of CIT v. J.V. Gupta & Soons(HUF) (109TAX49) the assessing officer assessed amount received as salary by the HUF under the head “salaries” yet declined claim for standard  deduction on the ground that the HUF is a non-living person. Both the CIT(A) and the Tribunal allowed the claim of the assessee.  Affirming the stand of the Tribunal the Delhi High Court held that once an appropriate head, mentioned in clauses A to F of section 14, for chargeability of the income received is determined, then the total income under that head has to be computed as per the procedure prescribed under the specific head. Having himself brought to tax the money received by the assessee under the head “salaries”, it is axiomatic that the income chargeable under that head has to be computed after allowing deduction under section 16 of the Act.


As regards the question as to whether salary received by the HUF is rightly taxed under the head “salaries” the court declined to answer as it is not open in the advisory jurisdiction to bring out a new issue which the Tribunal did not had the occasion to consider. The Madras High court however in the case of Commissioner of Income-tax Vs. Sankarapandian (N.S.M.)(222ITR289) held that since the Hindu undivided

family is not a legal entity, it cannot enter into a contract for payment of salary. Thus it may be argued that the salary received by the HUF may be assessed under the head “income from other sources” and not “salaries”.

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