Family-controlled business profits taxed as Hindu undivided family income where karta acted through family assets and control.

Profits earned by a karta from transactions connected to a family-controlled business were held taxable as Hindu undivided family income where the shares, finance, control, and business opportunities belonged to the family. The court found a sufficient nexus between the family assets and the profits, because the karta acted in that capacity and the income arose from advantages created by the family's investment and position in the companies. On those facts, the profits were assessable in the hands of the Hindu undivided family rather than the individual karta.

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Issues: Whether profits arising from transactions of Lal Mills with certain parties were assessable in the hands of the individual karta or in the hands of the Hindu undivided family.

Analysis: The shares of the companies and the finances supporting the business were found to belong to the Hindu undivided family, and the karta was acting in that capacity when dealing with the transactions. The income was earned by reason of the control and opportunities which the family's investment and position in the companies afforded. On those facts, a sufficient nexus existed between the family and the profits brought to tax.

Conclusion: The profits were assessable in the hands of the Hindu undivided family and not in the hands of the individual karta.

Final Conclusion: The reference was answered against the assessee, and the tax liability on the disputed profits attached to the family.

Ratio Decidendi: Where a karta earns profits by virtue of opportunities and control arising from the assets and financing of the Hindu undivided family, the resulting income is taxable as the family's income.

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