Partner-earned income remains separate unless clearly blended into the family estate and common stock.

Income earned under the managing agency agreement was held to belong to the individual partners, not the Hindu undivided family, because the agreement and surrounding circumstances showed the business arrangement was entered into by the partnership. The principle applied was that income earned by partners does not become joint family income unless there is a clear act of blending it with the family estate and throwing it into the common stock. Prior treatment of the receipts as family income could not change their true character, and the joint family's disability under company law did not convert the commission into family income.

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Issues: Whether the managing agency commission earned under the agreement was includible in the total income of the Hindu undivided family for the assessment years in question.

Analysis: The income had accrued in a Native State and was exempt from tax under the relevant exemption provision, though it could be considered for rate purposes. The managing agency agreement was entered into by the two individuals as partners, and the subsequent partnership deed, registered under the Mysore Partnership Act, showed that the partnership had been in existence from an earlier date. The governing principle was that income earned by partners does not become joint family income unless the earners agree to throw it into the common stock and blend it with the family income. Mere prior treatment of the income as family income could not alter its true character. The disability of a joint family under company law did not convert the commission into family income where the agreement, on its terms and surrounding circumstances, was really entered into by the partnership.

Conclusion: The commission was the individual income of the partners and not the income of the Hindu undivided family; the question was answered in the negative and in favour of the assessee.

Ratio Decidendi: Income earned by individual partners is not assessable as joint family income unless there is a clear act of blending it with the family estate and throwing it into the common stock.

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