Hindu undivided family income rules apply to a karta's managing director remuneration earned through joint family funds.

A karta's remuneration as managing director was treated as income of the Hindu undivided family where the office was obtained through a family venture financed with joint family funds. The Court noted that the company was promoted, acquired and financed from family assets, the qualifying shares were bought with those funds, the dividends were enjoyed by the family, and the remuneration had been treated in the family accounts as family income. The personal element in holding the office did not alter the legal character of the receipt, because the appointment and its benefits were inseparably linked to the family's resources and enterprise. The remuneration was therefore assessable in the hands of the HUF, not as the karta's personal income.

---

---

Issues: Whether the remuneration received by a karta as managing director of a company floated and financed with joint family funds was assessable as the income of the Hindu undivided family or as his personal income.

Analysis: The managing directorship was found to be inseparably connected with the promotion of the company, the acquisition of the business, and the financing of the concern from joint family assets. The shares qualifying the appointment were acquired with family funds, the dividends were enjoyed by the family, and the remuneration had consistently been treated in the family accounts as family income. The personal element in the office did not displace the legal consequence that the office and its remuneration were obtained as part of a scheme founded on joint family resources and benefit.

Conclusion: The remuneration was assessable in the hands of the Hindu undivided family and not as the karta's personal income.

Final Conclusion: The appeal succeeded, and the assessment of the managing director's remuneration was upheld as income of the Hindu undivided family.

Ratio Decidendi: Where a karta obtains an office and the resulting remuneration through the use of joint family funds and in furtherance of a family venture, the remuneration is income of the Hindu undivided family.

---