SALARY TO HUF

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This query is : Resolved

Devendra (Querist)

23 July 2011 MR. X HAVING STATUS AS HUF IS A PARTNER IN M/S ABC & CO., BUT AS PER MY KNOWLEDGE SALARY CANNOT BE GIVEN TO A HUF PARTNER BUT INTEREST CAN BE GIVEN ON THE CAPITAL. WHY IS IT NOT ALLOWED TO GIVE SALARY TO HUF PARTNER?
PLEASE EXPLAIN

REGARDS,
DEVENDRA

CA Suresh Jain

CA Suresh Jain (Expert)

24 July 2011 Salary can be paid to karta of the HUF partner who is appointed to look after the business of the firm on behalf of the HUF partner and the same shall be taxable in the hands of HUF not in the hands of HUF.Pl. refer section 40 and also Commissioner of Income-tax v. N. Deenadayalan [2000]241 IT Mad

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

25 July 2011 Before payment of salary there should a clause in the Partnership Deed to make the payment of salary to the working partner and the amount of salary should also be mentioned. If it is there then the karta of HUF can be paid salary as a working partner there is no restriction as has been stated by you. You should also consider the reply of the other expert.

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