Coparcener remuneration tax test: income is individual when paid for personal services, not as return on joint family funds.

A coparcener's managing director remuneration is taxable in individual hands where it is earned for personal services and not as a return on joint family funds. The governing test is whether there is a real and substantial nexus between family assets and the receipt, including any detriment to family property or use of family investment to secure the post. On the stated facts, the appointment was made by board resolution, the salary was paid for personal services, and there was no material showing that the office was obtained on behalf of the Hindu undivided family; the amount was therefore individual income, not family income.

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Issues: Whether the managing director's remuneration received by a coparcener was assessable in his individual hands or as income of the Hindu undivided family.

Analysis: The governing test is whether the receipt is, in substance, a return on the investment of joint family funds or a compensation for personal services rendered by the coparcener. Relevant considerations include whether there was a real and substantial connection between the family assets and the remuneration, whether the family suffered detriment in earning the income, and whether the appointment or remuneration was part of the return for the family's investment. Where the managing directorship is an employment of personal responsibility and ability, and the remuneration is earned for services rather than as a mode of return on family investment, the amount is taxable as individual income. On the facts found, the appointment was by resolution of the board, the salary was paid for personal services, and there was no material showing that the post was obtained on behalf of the family or as a consequence of detriment to family property.

Conclusion: The remuneration was assessable as the individual income of the coparcener and not as the income of the Hindu undivided family.

Ratio Decidendi: Remuneration received by a coparcener is taxable as family income only when it is, in substance, a return attributable to the investment of joint family funds and bears a real and substantial nexus with family assets; if it is compensation for personal services, it remains the coparcener's individual income.

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