TaxTMI 
TaxTMI 
1975 (5) TMI 8
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....re brothers and along with their father constituted a Hindu joint family. This joint family carried on business in the name and style of Kohinoor General Industries up to the assessment year 1959-60. Later, there was a partial partition in the family when the joint family business was converted into a partnership firm consisting of the two brothers and their father as partners. In July, 1961, a private limited company was formed in the name and style of M/s. Ghaziabad General Industries (P.) Ltd., which took over the business run by the partnership firm. The assessees and their father were appointed as lifetime directors of the company. Article 15 of the articles of association provides that if any director is willing he may be called upon ....
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....Bench of this court of which one of us was a member, by an order dated May 18, 1973, directed the Tribunal to record a finding on the material already on record as to whether the assessees rendered any service to the company and if so what was the nature and extent of service. The Bench took the view that the fact that the assessees acquired the shares which qualified them to become directors out of the joint family funds is not decisive nor is decisive the fact that there is a provision in the articles of association authorising such payments. The answer to the question would depend on the nature and extent of services rendered by the assessee's to the company, namely, as to whether the services rendered were of such a nature as depended o....
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....ried on transport business. The shares which qualified the karta to become a member of the company were purchased with the aid of joint family funds. The entire capital assets of the company originally belonged to the joint family and were made available to the company in consideration of a mere promise to pay the amount for which the assets were valued. The Supreme Court observed : " 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. " It was held that the entire income earned by way of salary, commission and sitting fees along with the dividen....
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....n that his family had purchased considerable shares in the firm. He was elected managing director by the board of directors and there was no material to hold that he was elected managing director on behalf of the family. The finding recorded by the Tribunal was that he was not appointed as managing director as a result of any outlay or expenditure of or detriment to the family property. On facts, that case is clearly distinguishable and is of no assistance to the assessees. A similar question arose for consideration before this court in Bimal Kumar Jain v. Commissioner of Income-tax [1974] 93 ITR 225 (All). In that case a Hindu undivided family owned almost half the shares of a company. The karta of the family was appointed a director unde....