Partnership remuneration treated as family income where payment arose from partner status, not a separate contract of service.

A payment described as remuneration to a partner who represented a Hindu undivided family in the firm was treated as part of the family's income, not the partner's individual income. The court found that the amount did not arise from independent employment or a separate contract of service, because there was no real master-servant relationship between the partner and the firm. As the payment was variable, linked to the partnership arrangement, and operated as additional profit from the firm, it was assessable in the hands of the Hindu undivided family.

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Issues: Whether the sum of Rs. 6,000 paid to a partner as so-called remuneration for looking after the partnership business was taxable as the personal income of the partner or as part of the income of the Hindu undivided family represented by him.

Analysis: The payment was made to a partner who represented the Hindu undivided family in the firm and had contributed family funds to the partnership. The deed described the amount as remuneration, but the surrounding circumstances showed that it was not payment for independent employment or special personal services. There was no true relationship of master and servant between the partner and the firm, and the amount was variable, to that paid to another partner, and functioned as additional profit arising from the partnership arrangement. The cited authorities dealing with a karta's remuneration for family business and a servant's salary from an outside employer were distinguishable because, here, the payment arose from the partner's status in the firm and not from a separate contract of service.

Conclusion: The sum of Rs. 6,000 was not the individual income of the partner; it formed part of the income of the Hindu undivided family and was rightly included in its assessment.

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