1968 (2) TMI 18 - HC - Income Tax

Assessee is a Hindu undivided family - whether the salary earned by S as managing director has been rightly held to be the income of the assessee family - Held no

Summary

Issues:
1. Whether the salary received by S. Trilok Singh should be treated as his personal income or income of the Hindu undivided family.
2. Whether the salary of Rs. 6,000 earned by S. Trilok Singh as managing director has been rightly held to be the income of the assessee family.

Analysis:

Issue 1:
The case involved three connected proceedings under section 66 of the Indian Income-tax Act, 1922, where the question was whether the salary of Rs. 6,000 received by S. Trilok Singh annually should be considered as his personal income or the income of the Hindu undivided family. The Income-tax Officer initially included the salary in the family's income for two assessment years, but the Appellate Assistant Commissioner and the Tribunal later held it to be the individual income of S. Trilok Singh. The Tribunal found that the joint family funds and the salary earned by S. Trilok Singh were not related as cause and effect. The court analyzed precedents and concluded that the salary was not the income of the Hindu undivided family, especially considering that S. Trilok Singh's appointment as managing director was not due to the investment of joint family funds in the company.

Issue 2:
In the subsequent assessment years, the Income-tax Officer again considered the salary as the income of the Hindu undivided family, but the Tribunal reversed this decision, stating that the remuneration should be assessed in the individual hands of S. Trilok Singh. The Tribunal found that his appointment as managing director was based on his personal qualifications in the transport service business, not due to joint family funds. The court upheld the Tribunal's decision, stating that no question of law arose in these cases, and dismissed the applications under section 66(2) of the Act. The court answered the question in Income-tax Reference No. 837 of 1963 in the negative, in favor of the assessee, and awarded costs. Similarly, in Income-tax Cases Nos. 65 and 66 of 1966, the applications were dismissed with costs assessed at Rs. 100 in each case.