Revisional power and HUF income: remuneration linked to joint family assets was taxable as family income.

The Commissioner's revisional power extended to an unappealed assessment of a Hindu undivided family; the resulting adjustment in the individual assessment was only consequential and did not amount to revision of the appellate order. Remuneration in the form of salary, commission and sitting fees received by the karta was treated as Hindu undivided family income because the company was formed from joint family assets, the shareholding was acquired with family funds, and the receipts had a real and sufficient nexus with the family property and business. The personal service element did not change the character of the income.

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Issues: (i) Whether the Commissioner had jurisdiction under section 33B of the Income-tax Act, 1922 to revise the Income-tax Officer's order in relation to the Hindu undivided family. (ii) Whether the salary, commission and sitting fees received by the karta from the company constituted his individual income or the income of the Hindu undivided family.

Issue (i): Whether the Commissioner had jurisdiction under section 33B of the Income-tax Act, 1922 to revise the Income-tax Officer's order in relation to the Hindu undivided family.

Analysis: The revision was directed against the assessment of the Hindu undivided family, which had not been carried in appeal to the Appellate Assistant Commissioner. The consequent adjustment in the assessee's individual assessment was only a result of avoiding double taxation and did not amount to revision of the appellate order. The Commissioner could therefore exercise revisional power in respect of the unappealed assessment order.

Conclusion: The Commissioner had jurisdiction to revise the order.

Issue (ii): Whether the salary, commission and sitting fees received by the karta from the company constituted his individual income or the income of the Hindu undivided family.

Analysis: The company was formed on the strength of joint family assets and business, the initial shareholding was acquired with family funds, and the shares allotted in consideration of the assessee's services were treated as family assets. Applying the settled principle that remuneration earned from a company or firm is assessable in the hands of the Hindu undivided family when there is a real and sufficient connection between the family funds and the benefit received, the personal exertion element did not alter the source and character of the receipt. The question was one of mixed law and fact, and the Tribunal and High Court were justified in treating the income as family income.

Conclusion: The receipts were income of the Hindu undivided family.

Final Conclusion: The appeal failed on both jurisdiction and characterization of income, and the assessment in favour of the Revenue was upheld.

Ratio Decidendi: Where remuneration or similar receipts are derived with a real and sufficient connection to joint family funds or assets, they are taxable as Hindu undivided family income even if personal service also contributes to the earning of the amount.

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