Karta's remuneration taxed as individual income where payment was for personal services, not a return on family investment.

Remuneration and director's fees received by a karta are assessed in the hands of the Hindu undivided family only if the receipt is, in substance, a return on family investment or attributable to family funds. Where the payment is compensation for the coparcener's personal services, it is individual income even though the family holds shares in the company. On the stated facts, there was no evidence that the karta acted or was appointed on behalf of the family, no detriment to family property, and no direct link between the shareholding and the appointment or remuneration; the income was therefore taxable in the karta's personal hands.

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Issues: Whether remuneration and director's fees received by a karta from a company could be assessed in the hands of the Hindu undivided family where the family held shares in the company.

Analysis: The governing principle is whether the receipt is, in substance, a return on the investment of family funds in the business or a compensation for services rendered by the individual coparcener. If the income is essentially earned because of family investment, it belongs to the Hindu undivided family; if it is essentially remuneration for personal services, it is the individual income of the coparcener. On the facts, there was no evidence that the karta was appointed as director on behalf of the family, no detriment to family property, and no direct link between the family shareholding and the appointment or remuneration.

Conclusion: The remuneration and director's fees were assessable as the individual income of the karta and not as income of the Hindu undivided family.

Ratio Decidendi: Where a coparcener's receipt is compensation for personal services and not a return attributable to the investment of family funds, it is taxable as individual income even if the family holds shares in the company.

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