Joint family property character governs remuneration earned through an office obtained by family shareholding, making the income taxable to the family.

Where a karta's office as managing director was obtained through family shareholding purchased with joint family funds, the remuneration, commission and sitting fees were treated as income traceable to joint family property and therefore assessable in the hands of the Hindu undivided family. The court rejected the view that such receipts were merely personal earnings because they arose from contractual service, and applied the principle that income derived through the use of family assets retains its joint family character when the asset is the source of the qualifying office. The resulting income was held taxable as family income, not the separate income of the karta.

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Issues: Whether the managing director's remuneration, commission and sitting fees received by a karta from a company are assessable as the income of the Hindu undivided family when the qualifying shares were purchased from family funds.

Analysis: The source of the office of director and managing director was the family's shareholding, and the shares themselves were acquired out of joint family funds. The Court held that the income attributable to that office could not be detached from the family asset which enabled the karta to hold the office. It declined to follow the earlier view that such remuneration was merely personal earnings because it resulted from contractual service. Relying on the Supreme Court's principle that there is no valid distinction between direct use of family funds and their use in qualifying a member to earn gains, the Court concluded that where the income is traceable to family property, it retains the joint family character.

Conclusion: The remuneration, commission and sitting fees were assessable as income of the Hindu undivided family, and the answer was against the assessee.

Final Conclusion: Income derived from an office obtained by reason of joint family assets is taxable in the hands of the family when the earning is traceable to that family property.

Ratio Decidendi: Income that emanates from and is traceable to joint family property cannot be treated as the separate income of the karta merely because personal service is involved in earning it.

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