Coparcener remuneration taxed as individual income where payment was for personal services, not a return on HUF funds.

Remuneration received by a coparcener from companies in which the HUF held shares is assessable as the individual's income where it is, in substance, compensation for personal services rather than a return on joint family funds. The fact that family funds were used for shareholding or qualification shares is not conclusive. Where the coparcener devotes full time, performs day-to-day functions, supervises business operations, and is paid for services actually rendered, the receipt retains the character of personal income. The Rajasthan HC accordingly treated the remuneration as the coparcener's individual income and not includible in the HUF's income.

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Issues: Whether the remuneration received by a coparcener from companies in which the Hindu undivided family held shares was includible in the income of the Hindu undivided family or assessable as his individual income.

Analysis: The controlling test is whether the receipt is, in substance, a return on the investment of family funds or whether it is compensation for services rendered by the individual coparcener. The existence of family shareholding or the fact that qualification shares were held through family funds is not conclusive. Where the coparcener devotes his whole time, performs day-to-day functions, supervises business operations, and receives remuneration for services actually rendered, the receipt retains the character of personal income. The circumstance that the appointment arose in a business where the family had an interest does not, by itself, convert the remuneration into family income.

Conclusion: The remuneration was not includible in the income of the Hindu undivided family and was assessable as the individual income of Shri Hiralal Maganlal Parikh.

Ratio Decidendi: Remuneration received by a coparcener is taxable as the Hindu undivided family's income only when it is, in substance, a return on joint family funds; if it is essentially compensation for personal services, it is the individual's income notwithstanding the family's shareholding or funding of qualification shares.

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