Partner remuneration for management services treated as individual income, not Hindu undivided family income, where paid under the partnership deed.

Remuneration paid to a coparcener appointed manager under a partnership deed was held to be his individual income, not assessable in the Hindu undivided family's hands. The arrangement expressly provided payment for services rendered in conducting the business, so the amount was not treated as a mere share of partnership profits. The court applied the principle that a partner may, subject to contract, receive remuneration for taking part in the conduct of the business. Because the payment was earned for the coparcener's personal skill, ability and management services, it could not be attributed to the family merely because family capital had been supplied.

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Issues: Whether remuneration paid to a coparcener who was appointed manager under the partnership deed was his individual income or assessable as the income of the Hindu undivided family.

Analysis: Under the partnership deed, the partners expressly agreed to remunerate the manager for services rendered in conducting the business. Such remuneration was not treated as a mere share of profits arising from partnership membership. The arrangement fell within the principle that, subject to contract between the partners, a partner may be entitled to remuneration for taking part in the conduct of the business. On the facts, the payment was made for the personal skill, ability and management services of the coparcener, and there was no basis for treating it as income earned by the family merely because the family had earlier supplied the capital or because he was one of the partners.

Conclusion: The salary of Rs. 6,000 was the individual income of Shri G.V. Dhakappa and could not be included in the assessment of the Hindu undivided family.

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