1979 (11) TMI 28

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....i Sundar Dass & Sons Private Ltd. did not constitute income of the assessee-family ? " The assessee has been the HUF of Bhai Tirlochan Singh. The assessment year was 1960-61. The background of the facts is that there was a firm known as Bhai Sundar Dass & Sons, carrying on the business of manufacture of machinery utilised in the construction of buildings, etc. In this firm, Bhai Trilochan Singh, as karta of the HUF, was a partner. On March 29, 1959, company in the name and style of Bhai Sundar Dass & Sons Pvt. Ltd. was incorporated. This company took over the running business of that firm. In this company, the assessee-family held 228 shares of the face value of Rs. 22,800. By a resolution passed on. April 16, 1959, an extraordinar....

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....ure of machinery which the company had started manufacturing. The assessee, feeling still aggrieved, then moved the Tribunal. It was then urged that Trilochan Singh was earlier a partner in a number of firms which were carrying on business of manufacturing machinery useful in building works and had acquired great experience in the particular line of business since a long time. His income for the year 1957-58 alone was assessed at Rs. 88,754. The Tribunal, after considering all these circumstances and taking into account the ratio of the decision given by the Supreme Court in the case of Palaniappa Chettiar v. CIT [1968] 68 ITR 221, came to the conclusion that the salary income enjoyed by Bhai Trilochan Singh had to be treated as his indi....

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....m these subsidiary principles, the broader principle that emerges is whether the remuneration received by the coparcener in substance though not in form was but one of the modes of return made to the family because of the investment of the family funds in the business or whether it was a compensation made for the services rendered by the individual coparcener." As observed in this case, what has to be ascertained is whether the remuneration received by the karta in substance though not in form was not one of the modes of return made to the family because of the investment of the family funds in the business or whether it was a compensation made for services rendered by the individual coparcener. There is nothing to show that the investme....