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Commissioner Of Income-Tax, Madras vs R.M. Chidambaram Pillai Etc on 17 November, 1976

29. The case of CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 292(SC), relied on by the assessed, is in a different context. The controversy therein was whether the salary paid to a partner was a different label for profits, thus entitling it to be partly exempt as agricultural income. Holding that the salary of a partner represented a special share of profits and retained the same character as the income of the firm, the Supreme Court opined that it was exempt under r. 24 of the Indian I.T. Rules, 1922, to the extent of 60% thereof representing agricultural income. In coming to this conclusion it observed that a contract of employment required two distinct persons, viz., the employer and the employee, and there could be no contract of service between a firm and one of its partners, as a firm was only an expression for the persons who had agreed to carry on business in partnership. Krishna Iyer J., speaking for the court, observed that, though for the purposes of the I.T. Act, a firm had certain attributes simulative of personality, yet it was not a person but a plurality of persons.
Supreme Court of India Cites 21 - Cited by 205 - V R Iyer - Full Document
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