TMI Blog1970 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the court was delivered by SHAH J.-- The assessee is a Hindu undivided family. Prem Nath, the manager of the family, was admitted as representing the family to a partnership styled "M/s. K. C. Raj Company". Under the terms of the partnership Prem Nath was entitled to an "allowance of Rs. 700 per month" for "rendering service" to the partnership. In proceedings for assessment of income-tax of the Hindu undivided family, the Income-tax Officer rejected the contention that the remuneration paid to Prem Nath was the individual income of Prem Nath. The order was confirmed in appeal by the Appellate Assistant Commissioner and, in second appeal, by the Income-tax Appellate Tribunal. The Tribunal submitted the following question to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed manager of the firm on a remuneration of Rs. 500 per month. There was no finding by the Tribunal that the salary was paid to the manager because the assets of the family were utilised by the firm. This court held that the remuneration received by the karta was not the income of the Hindu undivided family. In reaching that conclusion this court relied upon the judgment in V. D. Dhanwatey v. Commissioner of Income-tax, wherein it was observed that remuneration paid to a member of a Hindu undivided family, who represents the family in a partnership, will be treated as the income of the family if it is directly related to the investment in the partnership business with the assets of the Hindu undivided family. If there is "real and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that a coparcener had rendered some service would not change the character of the receipt. But if on the other hand it is essentially a remuneration for the services rendered by a coparcener, the circumstance that his services were availed of because of the reason that he was a member of the family which had invested funds in that business or that lie had obtained the qualification shares from out of the family funds would not make the receipt, the income of the Hindu undivided family." Applying these principles, there can be no doubt that the income received by Prem Nath was remuneration for services rendered by him and there was no real and sufficient connection between the investment of the joint family assets and the remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
