HUF income attribution turns on family-owned qualifying shares supporting a director's office and resulting sitting fees.

Sitting fees received by a karta as a company director were treated as Hindu undivided family income where the qualifying shares were impressed with joint family property. The determining factor was that the remuneration arose from an office sustained by family assets: the director's position was not separately thrown into the hotchpot, but the family-owned shares furnished the basis for the directorship. The income was traced to its basic foundation, and there was no material distinction between direct use of family funds to acquire the qualifying shares and their continued use to maintain the qualification that generated the income. The sitting fees were therefore taxable in the hands of the HUF, not as the assessee's separate income.

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Issues: Whether sitting fees received by a karta as director of companies, where the qualifying shares were impressed with the character of joint family property, were assessable as the income of the Hindu undivided family.

Analysis: The determining factor was whether the remuneration was earned with the help of joint family assets. The Court held that the office of director was not separately thrown into the hotchpot, but the qualifying shares were owned by the Hindu undivided family and continued to furnish the basis for the assessee's directorship. There was no valid distinction between the direct use of family funds to acquire qualifying assets and the use of those assets to sustain the qualification from which the income arose. The character of the income had to be traced to its basic foundation, and where the family property was the source of the qualification necessary to hold the office, the resulting income partook of the family character.

Conclusion: The sitting fees were taxable in the hands of the Hindu undivided family and not as the assessee's separate income.

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