TMI Blog1949 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was made on the basis that the family of which Mr. Sankaralinga Ayyar was the karta or the manager was an undivided Hindu family. For the assessment year 1943-44 Mr. Sankaralinga-Ayyar claimed that the remuneration of ₹ 18,991 which he received as the managing director of the Indo-Commercial Bank and a sum of ₹ 105 which he received as director's sitting fees were his personal earnings and not property belonging to the undivided Hindu family of which he has been the head and the manager. The only circumstance relied on behalf of the Commissioner of Income-tax to declare these two amounts family property is that in order to acquire the qualification for managing director Mr. Sankaralinga Ayyar utilised family funds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittedly the shares earn dividend which is included in the income of the family. Under Hindu Law, the remuneration of the managing director whose employment is in the nature of a contract of service would ordinarily be his self-acquisition and unless the earnings are thrown into the common stock or, in other words, blended with the family property, they would not become family property. The mere fact that the income is entered in the family accounts or is mixed in the bank account would not make it family property as that by itself would not constitute blending under Hindu Law, as it requires the throwing of the income into the common stock with the intention of abandoning the ownership and vesting it in the family. It is therefore difficul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K Company was not profit received by him from the use of the property of the D Company, and that C was under no liability to account for that remuneration to the D Company. The peculiar feature of this case is that C executed even a declaration of trust of the shares in favour of the D Company. Notwithstanding this circumstance, it was held that the remuneration received by him by using the property of the D Company was not remuneration in respect of which he was liable to account to the D Company. Cozens-Hardy, M.R., at page 69 considered the legal position of C in those circumstances and observed that the money received by C was received by him not by virtue of the shares but by virtue of a separate contract with the K Company and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service rendered by him to the Indo-Commercial Bank under a specific contract entered into by him with the Bank. The mere fact that he held a particular quantity of shares as manager of a joint family did not ipso facto enable him to function as the managing director. His personal qualifications were mainly responsible, in addition to the holding of shares, for his selection and appointment as the managing director of the Bank. The remuneration was really the quid pro quo for the work which he did under the contract of service with the Bank. The answer to the argument of the learned counsel for the Income-tax authority that the managing director could not have earned the remuneration unless he had been qualified to act as director by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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