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Interpretation of Income-tax Act, 1922 regarding inclusion of managing director's remuneration in Hindu undivided family's income. Analysis: The case involved a question of whether the managing director's remuneration received by Sri Rameswar Prasad Bagla should be included as income of the Hindu undivided family. The assessment year was 1953-54, and the remuneration in question was Rs. 21,600. The firm of the three Bagla brothers, including Rameswar Prasad Bagla, acquired a controlling interest in Indian Textile Syndicate Ltd. The Income-tax Officer included the remuneration in the assessment of the Hindu undivided family, arguing that it was due to the family's controlling interest in the company. An appeal was allowed for the preceding assessment year, but the Tribunal held that the remuneration was rightly included for the current year. The Tribunal found that the family funds indirectly enabled Rameswar Prasad Bagla to become the managing director, making the remuneration attributable to the family. The Supreme Court's decision in Kalu Babu Lal Chand's case was cited, emphasizing that income derived from family funds, directly or indirectly, belongs to the family. The Court highlighted the importance of the ratio decidendi of Supreme Court decisions in similar cases and the need to avoid drawing fine distinctions between cases. The Court also referenced a case where family funds indirectly led to income, reinforcing the principle that such income belongs to the family. The Court rejected the comparison to a different Supreme Court case where family property was used as security, emphasizing the distinction between personal benefits and family-derived earnings. Ultimately, the Court answered the question in the affirmative, ruling that the managing director's remuneration should be included in the Hindu undivided family's income. The assessee was directed to pay costs, and the reference was answered accordingly. In conclusion, the judgment clarified the application of the Income-tax Act regarding the inclusion of managing director's remuneration in the income of a Hindu undivided family. It relied on precedent cases and the principle that income derived from family funds, whether directly or indirectly, belongs to the family. The Court emphasized the need to consider the ratio decidendi of Supreme Court decisions and avoid drawing fine distinctions between cases with similar principles.
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