TaxTMI 
TaxTMI 
1969 (2) TMI 2
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....artnership dated 5th June, 1961, and 11th September, 1957. Shri D. C. Shah was paid a remuneration of Rs. 12,000 per year for both the assessment years by M/s. C. U. Shah and Co. He was paid Rs. 10,000 for the assessment year 1959-60 by the Oriental Can Manufacturing Co. The amounts received by Shri D. C. Shah were shown by the assessee in its returns of income along with balance of the share income from the aforesaid firms. The Income-tax Officer in assessing the Hindu undivided family included the remuneration received by Shri D. C. Shah as a part of the share income from the respective firms. Before the Appellate Assistant Commissioner the assessee contended that the remuneration received by Shri D. C. Shah was his personal income and th....
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....earlier. 10. All other partners shall devote as much time to the furtherance of the partnership business as they think proper, necessary and advisable. " Clauses 14, 15 and 16 of the instrument of partnership dated 11th September, 1957, are to the following effect : 14. The partner No. 2 shall be the managing partner for conducting the said business free from any interference of whatsoever nature by others. The said managing partner shall manage, carry, direct, appoint and/or remove any of the employees and/or agent and do all other things, as may be deemed necessary, for effectively carrying on the partnership business. The said managing partner shall be entitled, in addition to all other benefits, to a monthly remuneration of Rs. 2,....
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....om the two firms of M/s. C. U. Shah & Co. and M/s. Oriental Can Manufacturing Co. includible in the assessment of the Hindu undivided family of which Shri D. C. Shah was the karta? " The High Court, relying upon its earlier decision in Gurunath V. Dhakappa v. Commissioner of Income-tax, held that the salary received by Shri D. C. Shah from the aforesaid firms cannot be included in the assessment of the Hindu undivided family of which he was the karta. These appeals are brought by special leave on behalf of the Commissioner of Income-tax, Bangalore, from the judgment of the Mysore High Court dated 19th January, 1965, in Income-tax Reference No. 1 of 1964. The question whether the remuneration earned by a member of a Hindu undivided famil....
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....ner of Income-tax, the facts were parallel to the facts in V. D. Dhanwatey's case and the salary received by the karta of the Hindu undivided family was treated as the income of the family. In S.RM. CT. PL. Palaniappa Chettiar v. Commissioner of Income-tax, the material facts were different. The karta of a Hindu undivided family acquired 90 out of 300 shares in a transport company with the funds of the family. In course of time he became the managing director of the company. As managing director the karta was entitled to salary and commission on the net profits of the company, and was entrusted with control over the financial and administrative affairs of the company. The only qualification under the articles of association for the office....
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....ly and were made available to the company in consideration of a mere promise to pay the amount for which the assets were valued. The income was primarily earned by utilising the joint family assets or funds and the mere fact that in the process of gaining the advantage an element of personal service or skill or labour was involved did not alter the character of the income. In cases of this class the character of the receipt must be determined by reference to its source, its relation to the assets of the family and the proximity of the connection between the investment from the joint family funds and the remuneration paid. Applying the principle laid down in V. D. Dhanwatey's case, it was held that the Tribunal was justified in holding that ....