Employment Control Determines Salary Character; remuneration held salary of the individual and not includible in joint family income.

The question whether treasurer emoluments are salary or business receipts is answered by applying the control/integration test: having regard to the written agreement, duties, employer supervision and responsibility for fidelity, the relationship was master and servant and the payments are salary. The further question whether those emoluments form part of the Hindu undivided family income was decided by assessing whether earnings involved family expenditure or risk to joint estate; mere lodging of family property as security did not create detriment or make the income partible. Operative effect: remuneration is taxable as the individual's salary and not includible in the joint family income.

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Issues: (i) Whether the emoluments received by Sheel Chandra as treasurer of the Central Bank of India are assessable as salary or as profits and gains of business; (ii) Whether those emoluments are assessable as part of the income of the Hindu undivided family of which he is karta.

Issue (i): Whether the emoluments received by Sheel Chandra as treasurer are salary or business profits.

Analysis: The Court examined the written agreement between the treasurer and the bank, the duties and obligations imposed on the treasurer, the bank's control and supervision over the treasurer and the cash department staff, the treasurer's responsibility for fidelity and for losses, and comparable authorities concerning treasurers and similar employments. Applying the test of due control and supervision having regard to the nature of the work, and considering the agreement as a whole, the Court found the relationship to be one of master and servant rather than an independent contractor or agency supplying services as a business.

Conclusion: The emoluments are in the nature of salary and are assessable as salary. (Conclusion in favour of the assessee on this issue.)

Issue (ii): Whether the emoluments of the treasurer are part of the income of the Hindu undivided family.

Analysis: The Court considered whether the earnings were acquired with detriment or risk to joint family property such as by family expenditure to qualify the member or by use of family funds that exposed the estate to risk. The Court held that mere lodging of joint family property as security for the treasurer's obligations did not amount to the kind of detriment or risk to family estate recognized in authorities that make earnings partible; there was no family expenditure to equip the member nor evidence of risk/detriment in the sense applied by precedent.

Conclusion: The salary is the individual income of Sheel Chandra and not part of the income of the Hindu undivided family. (Conclusion in favour of the assessee on this issue.)

Final Conclusion: Both referred questions are answered in favour of the appellant; the emoluments are taxable as the individual's salary under the salary head and are not includible in the joint family income.

Ratio Decidendi: Where, having regard to the nature of the work, the employer exercises due control and supervision over the worker and the worker is integrated into the employer's business, the relationship is one of master and servant and remuneration is assessable as salary; mere furnishing of joint family property as security does not by itself make such remuneration partible as joint family income absent expenditure or detriment to the family estate.

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