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Issues Involved:
1. Whether the salary and other emoluments received by Shil Chandra as treasurer of the Central Bank of India Limited are assessable under the head "Salary" or under the head "Profits and gains of business". 2. Whether Shil Chandra's emoluments as treasurer were rightly assessed in the hands of the Hindu undivided family of which he is the karta. Detailed Analysis: Issue 1: Assessability of Emoluments The primary question is whether the remuneration received by Shil Chandra should be assessed under "Salary" or "Profits and gains of business." This determination hinges on whether Shil Chandra was a servant of the bank or an independent contractor. - Definitions and Tests: A servant is subject to the command of his master as to the manner of work, whereas an independent contractor exercises independent employment and is not subject to control except for the result of the work. Several tests were enumerated to determine independent contractor status, including the liberty to work for others, the ability to employ and control staff, financial responsibilities, and control over work details. - Contract Analysis: The contract between the bank and Shil Chandra, dated 19th September 1950, indicated that Shil Chandra was responsible for appointing and managing staff, had control over their activities, and bore financial responsibilities. These terms strongly suggest that he was an independent contractor. The bank's right to approve or demand dismissal of staff did not negate this status, as similar provisions have been held insufficient to establish a master-servant relationship in other cases. - Responsibilities and Financial Implications: Shil Chandra was responsible for the acts and omissions of his staff and had to indemnify the bank against any loss, a responsibility unusual for a servant but typical for an independent contractor. The fact that he succeeded his father as treasurer and returned his income under "Business" further supports this conclusion. - Conclusion: Based on the contract's terms and the nature of responsibilities, the court concluded that Shil Chandra's relationship with the bank was that of an employer and an independent contractor. Therefore, his emoluments are assessable under the head "Profits and gains of business." Issue 2: Assessment in the Hands of Hindu Undivided Family The second issue is whether Shil Chandra's emoluments as treasurer were rightly assessed in the hands of the Hindu undivided family (HUF) of which he is the karta. - Basis of Appointment: Shil Chandra obtained the treasurer position due to his father's previous role and the substantial security furnished. These securities were the property of the joint Hindu family and were at risk of being appropriated by the bank for any losses caused by negligence or carelessness. - Risk to Family Property: The Tribunal noted that the family property was put in jeopardy to secure the treasurer position, making it a clear case of risk or detriment to the family property. Unlike cases where director's fees were not considered family income because the family property was not jeopardized, here the family property was directly at risk. - Conclusion: Given the risk to the family property, the court agreed with the Tribunal that Shil Chandra's emoluments were rightly assessed in the hands of the Hindu undivided family. Final Judgment: The court declared: 1. The emoluments received by Shil Chandra as treasurer of the bank are assessable under the head "Profits and gains of business." 2. Shil Chandra's emoluments as treasurer were rightly assessed in the hands of the Hindu undivided family of which he is the karta. Reference answered accordingly.
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