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Issues: Whether salary received by the karta of a Hindu undivided family from a partnership firm, for services rendered by him to the firm, was assessable as the income of the Hindu undivided family.
Analysis: The salary was found to have been paid to the karta for managing the business and rendering services to the firm, and there was no finding that the payment was linked to the investment of the family funds in the firm or that it caused any detriment to the joint family assets. Mere inclusion of the salary clause in the partnership deed did not, by itself, make the payment income of the Hindu undivided family. The controlling principle emerging from the authorities is that such remuneration is taxable in the hands of the family only where it has a direct nexus with the family's investment in the firm and is in substance a return on the family funds; where it is compensation for personal services, it belongs to the individual coparcener.
Conclusion: The salary was not assessable as the income of the Hindu undivided family and was taxable in the hands of the karta individually.
Ratio Decidendi: Remuneration paid to a karta or coparcener by a firm is not income of the Hindu undivided family unless it has a direct nexus with the family's investment in the firm or is earned to the detriment of joint family assets; if it is essentially payment for personal services, it is the individual's income.
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