Karta's directorship remuneration treated as family debt and deductible in net wealth computation

Remuneration credited to a Hindu undivided family's karta for directorships was treated as the karta's individual earnings, but because the amounts were payable by the family they constituted debts owed by the family. On that basis, the liability was deductible in computing the family's net wealth. The view was applied consistently with the assessee's earlier assessment year, and the Tribunal's treatment of the remuneration credits as deductible liabilities was upheld.

---

---

Issues: Whether remuneration credited to the karta of a Hindu undivided family, being individual earnings from directorships, could be treated as a debt owed by the family and allowed as a deduction in computing the family's net wealth.

Analysis: The amounts credited represented the karta's individual remuneration from two companies for holding office as director. On the facts, the credits constituted amounts payable by the family to the karta and therefore answered the description of debts owed by the family. The same view had already been taken in the assessee's own earlier assessment year, and the present reference was answered consistently with that binding reasoning.

Conclusion: The deduction was allowable, and the question was answered in the affirmative against the Department.

Final Conclusion: The Tribunal's view allowing the remuneration credits as liabilities in computing the Hindu undivided family's net wealth was upheld.

Ratio Decidendi: Amounts representing the individual remuneration of a karta from directorships, when payable by the Hindu undivided family, are deductible as debts owed in computing net wealth.

---