TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court rules remuneration to individual not part of family income</h1> <h3>Hiralal Maganlal Parikh Versus Commissioner of Income-Tax, Rajasthan.</h3> The court ruled that the remuneration received by Shri Hiralal Maganlal Parikh from two companies should not be included in the income of the Hindu ... ' Whether, on the facts and in the circumstances of the case, the remuneration received by Shri Hiralal Maganlal Parikh from the Associated Stone Industries (Kotah) Ltd. for all the three years and from the Rajputana Mining Agencies Pvt. Ltd. for the last year was includible in the income of the Hindu undivided family of which he was the karta ? ' - held no Issues Involved:1. Inclusion of remuneration in the income of the Hindu Undivided Family (HUF).2. Determination of whether the remuneration received by Shri Hiralal Maganlal Parikh was due to family investments or personal services.Issue-Wise Detailed Analysis:1. Inclusion of Remuneration in the Income of the Hindu Undivided Family (HUF):The primary issue was whether the remuneration received by Shri Hiralal Maganlal Parikh from Associated Stone Industries (Kotah) Ltd. and Rajputana Mining Agencies Pvt. Ltd. should be included in the income of the HUF of which he was the karta. The Income-tax Officer had assessed this remuneration in the hands of the HUF, arguing that it was a result of the family holding a substantial portion of shares in these companies. This view was upheld by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal.2. Determination of Whether the Remuneration Was Due to Family Investments or Personal Services:The court examined whether the remuneration was earned due to the investment of family funds or for personal services rendered by Shri Hiralal. The Tribunal had concluded that Shri Hiralal's duties were ordinary and day-to-day affairs, which the managing agents were bound to perform, and thus the remuneration was traceable to the family's shareholding.The court referred to several precedents, including the Supreme Court cases of Kalu Babu Lal Chand, Mathura Prasad, and Raj Kumar Singh Hukam Chandji, to determine the principle applicable to this case. The broader principle derived was whether the remuneration was essentially a return on family investments or compensation for personal services.The court noted that Shri Hiralal was devoting his whole time to the affairs of the company, attending to all day-to-day work, supervising branch offices, and holding individual shares in A.S.I. It concluded that the remuneration was for the services rendered by Shri Hiralal, not a return on the family's investment.The court also examined the Government of India's letter, which stated that the remuneration of the director-in-charge should be met out of the managing agents' remuneration. However, this did not change the nature of the remuneration paid to Shri Hiralal.In conclusion, the court found that the directorship and the remuneration were due to personal responsibility and ability, not family investments. Therefore, the remuneration received by Shri Hiralal from both companies should not be included in the income of the HUF.Judgment:The court answered the question in the negative, concluding that the remuneration received by Shri Hiralal Maganlal Parikh from Associated Stone Industries (Kotah) Pvt. Ltd. for all three years and from Rajputana Agency Private Ltd. for the last year was not includible in the income of the Hindu undivided family of which he was the karta. The parties were left to bear their own costs.
TaxTMI 
TaxTMI 
