TMI Blog1962 (3) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of Jugal Kishore Baldeo Sahai. The business was of commission agency in cloth. The family also derived income from property and was a partner through its karta (Babu Ram) in several firms. The share of profit from these firms also formed part of the income of the assessee. The assessee family consisted of Babu Ram (karta) and his brother, Gobardhandas, and their sons. Babu Ram looked after all the businesses through which the family derived its income; Gobardhandas did not take part in the management. In June, 1946, Babu Ram wrote a letter to Gobardhandas stating that since he was managing all the businesses, he ought to get a salary of ₹ 1,000 per month. This was promptly agreed to by Gobardhandas. Accordingly, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is his duty to manage the business of the family. His position is almost that of an overlord and, for all practical purposes, he is the Hindu undivided family. His powers are wider than those of the other members of the family. He cannot be an employee of his own family. The expenditure of ₹ 12,000 per annum cannot be said to be for the benefit of the family. (iii)Only Gobardhandas consented to the payment of the salary to the karta and not the other members of the coparcenary, namely, the minor sons of the karta and of Gobardhandas. And, in any case, the consent by itself cannot convert the payment into an expenditure laid out or expended wholly and exclusively for the purpose of the business. (iv)The fact that at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior member, it does not stand to justice to deny him the ordinary rights. The karta should not labour under disability or disadvantage merely by reason of his being the senior member of the family. In the instant case the salary paid to the karta is not an income earned by the use of the family property but it is only the return of compensation in terms of money agreed by all coparceners to be paid for personal work by the karta in looking after all the family businesses and it is, therefore, an allowable business expenditure. The Commissioner of Income-tax asked for a reference of the case to this court under section 66(1) and the case has accordingly been referred to us for the decision of the question stated in the beginning of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t depended upon the facts of each case. Another case which was cited is Knightsdale Estates v. Commissioner of Income-tax [1955] 281 ITR 650. Here three Hindu undivided families constituted themselves into a partnership and a certain remuneration was paid to the karta of one of them for managing the partnership. It was held that the remuneration received by the karta was his separate income and was not the income of his family. This case also is not of any help because the karta was not bound to carry out the management of the partnership except under the contract of partnership. The last two cases, namely, Commissioner of Income-tax v. Jainarain Jagannath [1945] 13 ITR 410 and Jitmal Bhuramal v. Commissioner of Income-tax [1959] 37 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served: In the absence of a valid special agreement, the managing Coparcener of a joint Hindu family is clearly entitled to no special remuneration as the property which he manages is one of which he is a joint owner. We find the following statement in N.R. Raghavachariar's Hindu Law, fourth edition, page 276, based on the same case: A manager is in loco parentis to the other members of the family and his position which is unique is the result of both necessity and ancient privilege. His position is purely honorary, though in case of onerous services by the manager, he may be allowed by the family, under a special arrangement, to charge for the same. We also find in Mayne's Hindu Law, nth edition, at page 379, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we might advert. Can it be said that the payment made to Babu Ram was made under a special arrangement and that it could be justified on the basis of that arrangement? The only agreement pleaded is the exchange of letters between himself and Gobardhandas. These two were not the only members of the coparcenary; it consisted also of the minor sons of both Babu Ram and Gobardhandas. There is nothing to show that any agreement for the payment of this amount was arrived at on behalf of the minor sons. It also appears that the Appellate Assistant Commissioner was not quite satisfied that the annual payment of ₹ 12,000 was in fact made, or was made genuinely for managing the business. His view appears to be that the payment was merely in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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