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Issues: Determination of whether the sum of Rs. 18,000 was legally included in the assessee family's total income.
Analysis: The judgment by the Bombay High Court, delivered by Tendolkar, J., addressed the question of whether the Rs. 18,000 received by a Hindu undivided family as remuneration should be considered as the individual income of the karta or as income of the family. The partnership deed in question provided for remuneration to be paid to the karta, V.D. Dhanwatay, at specified rates. The Tribunal found no evidence of Dhanwatay rendering services individually to the partnership, concluding that the remuneration was for adjusting rights among partners and thus considered it as income of the Hindu undivided family. The court noted that initially, the income was included in the family's return, but later, a claim was made that it was the personal income of the karta based on the partnership deed. The argument presented was that since the remuneration was for services rendered by Dhanwatay, it should be considered his individual income and not that of the family. The legal representative of the assessee referred to precedents to support this argument, emphasizing that if the remuneration is for services rendered without detriment to family property, it is the karta's personal income. The court discussed the absence of evidence showing individual services rendered by Dhanwatay to the partnership, apart from the clause designating him as a general manager. The partnership deed's clause on remuneration raised a presumption that it was for adjusting rights among partners. Given the lack of proof of individual services and the Tribunal's finding that the remuneration was for internal adjustments, the court concluded that the income rightfully belonged to the Hindu undivided family and had been included as such until a later claim was made. Based on the established legal principle that individual income arises from services rendered without detriment to family property, and considering the specific circumstances of the case, the court affirmed that the income of Rs. 18,000 was correctly included in the family's total income. The court ruled in favor of the Commissioner, holding the assessee liable for costs and answering the reference in the affirmative.
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