Karta remuneration deduction allowed when payment is bona fide, for services rendered, and not excessive in family business income.

Remuneration paid by a Hindu undivided family to its karta is deductible in computing the family's income when the payment is bona fide, made for services actually rendered to the family business, and is genuine and not excessive. The deduction is available where the karta manages the family business and safeguards the family's interests in partner firms, and the expenditure is found to be in the interest of and expedient for the business. On the facts noted, the karta was looking after the joint family business and the salary was paid for services rendered to the family, with no finding of lack of genuineness or excessiveness.

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Issues: Whether remuneration paid by a Hindu undivided family to its karta for managing the family business and safeguarding the family's interests in partner firms was an allowable deduction in computing the family's income.

Analysis: The governing principle applied was that remuneration paid by a Hindu undivided family to its karta is deductible if it is bona fide, is paid for services rendered to the family, is in the interest of and expedient for the family business, and is genuine and not excessive. On the facts found, the karta was looking after the joint family business and the salary was paid for services rendered to the family. There was no finding that the payment was not genuine or excessive.

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

Ratio Decidendi: Remuneration paid by a Hindu undivided family to its karta is deductible in computing the family's income when it is bona fide, incurred for services rendered to the family business, and is genuine and not excessive.

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