JUDGMENT B.P. Jeevan Reddy C.J.
1. Common questions of law are raised in these income-tax references and writ petitions. They can be, therefore, disposed of under a common order.
2. There was a partnership firm in the name of Jagaran Publication, Kanpur, consisting of seven partners. Five of them, who are the petitioners/assessees in these matters, are Hindu undivided families. These Hindu undivided families were represented by their respective kartas in the aforesaid partnership, firm. According to the deed of partnership, the shares of all the seven partners were equal. However, the kartas of five assessees/petitioners were provided with salary as mentioned in the appropriate statement of case. In the assessment of these Hindu undivided families, a question arose whether the salary so received by the karta should be included in the share income of the Hindu undivided family or should be assessed as the separate individual income of the karta. The Income-tax Officer included the salary income in the share income of the Hindu undivided family, which was challenged in appeals by the Hindu undivided families. The Appellate Assistant Commissioner allowed the appeals and directed that the salary income should be treated as the separate income of the individual karta. The Department then went up in appeal to the Tribunal. The Tribunal held on facts that the salary paid to the karta was paid to him in lieu of personal services rendered by him and not on account of the fact that the Hindu undivided family was a partner of the firm. The Tribunal further held that following the decisions of the Supreme Court in CIT v. D.C. Shah [1969] 73 ITR 692 and Prem Nath v. CIT [1970] 78 ITR 319 (SC), the departmental appeals must be dismissed but it felt, that the subsequent decision of the Supreme Court in CIT v. R.M. Chidambaram Pillai [1977] 106 ITR 292 does not permit it to take the said view. The Tribunal held that, according to the said decision of the Supreme Court in CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 292, a contract of employment requires two persons which cannot be said to be present in the case of a partnership firm and hence the salary received by the partners is liable to be included in the share income of the partners. Accordingly, it allowed the appeals filed by the Department and directed that the salary income be included in the share income of the Hindu undivided family whereupon they applied for and obtained these references under Section 256(1). It would be sufficient to refer to the two questions referred in I. T. R. No. 33 of 1979 since the questions referred in all the references are common. The questions read thus :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the salary paid by the firm to Shri Puran Chand formed part of the share of profit and the same was assessable as the income of his Hindu undivided family on whose behalf he was a partner in the firm even though the firm, had paid salary to him for the personal services rendered by him ?
If the answer to question No. 1 is in the affirmative, (2) Whether the Tribunal was right in holding that the amount of salary paid to Shri Puran Chand Gupta by the firm could not be allowed as a deduction in the assessment of his Hindu undivided family as salary paid by the Hindu undivided family to him ?"
2. The writ petitions are filed against the orders of the Commissioner under Section 264 of the Act refusing to revise the orders of the Income-tax Officer including the salary income in the share income, of the Hindu undivided family following the decision of the Tribunal. They pertain to the subsequent years,
3. The first question referred under Section 256(1) is no longer "res integra" so far as this court is concerned. In Laxman Das v. CIT [1982] 138 ITR 628, a Bench of this court has considered an identical question arising on identical facts. The Bench followed the earlier decisions of the Supreme Court in CIT v. D.C. Shah [1969] 73 ITR 692 and Prem Nath v. CIT [1970] 78 ITR 319 and distinguished the later decision of the Supreme Court in CIT v. R.M. Chidambaram Pillai [1977] 106 ITR 292. The Division Bench decision is binding upon us. No contrary decision, either of the Supreme Court or of this court, is brought to our notice. We may also notice that the first question referred by the Tribunal itself says that the salary was paid to the karta "for the personal services rendered by him." The judgment of the Tribunal also shows that this salary paid to him was earned by the karta not on account of any detriment to the family assets but in consideration of his personal services. If so, the first question must be answered in the negative, i.e., in favour of the assessee and against the Revenue. We hold that the salary income of the kartas of these Hindu undivided family assessees cannot be included in the share income of the respective Hindu undivided families,
4. Once question No. 1 is answered in the negative, question No. 2 does not arise for consideration. It need not be answered. The income-tax references are answered accordingly and the writ petitions are allowed with the above directions. No order as to costs.