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TMI Blog1984 (12) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... m as an individual. The assessee-family therefore did not include in its return the salary income for this year. The ITO however taxed the salary along with the share of profits in the assessment of the assessee. In doing so, the ITO purported to follow the decision of the Tribunal in Janagarajan. 3. The AAC deleted the inclusion for the following reasons briefly: (i) Janagarajan s case had no application. That was a case where salary was paid by an HUF to its Karta to look after its interest in a firm in which it was a partner. In the instant case, salary was paid by firm to the Karta of the assessee-family who represented the family as a partner in the said firm. (ii) Rajesh, Karta, was in charge of booking of orders. He has 8 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld therefore exclude Rs. 8,000 from the share income of the assessee-family assessed by him. The Revenue is in appeal. 4. Shri V. S. Kandaswamy, Departmental Representative supported the order of the ITO. He submitted that in the light of the decision of the Supreme Court in V. D. Dhanwatey vs. CIT (1968) 68 ITR 365 (SC) where income had been earned by the Karta primarily by utilising the joint family funds; that the mere fact that in the process of gaining the advantage, there is an element of personal services or skill of labour would not alter the character of income. He also referred to the decision of the Allahabad High Court in Gopinath Seth vs. CIT (1983) 35 CTR (All) 334 : (1982) 135 ITR 365 (All). The further submission made is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) Raj Kumar Singh Hukam Chandji vs. CIT (1970) 78 ITR 33 (SC). Briefly, the following principles were laid down by the Supreme Court in Prem Nath: (i) There must be evidence brought on record to show that the salary in question was not for services rendered to the partnership by the Karta as an individual. Unless a finding is recorded that salary was paid to the Karta because the assets of the family were utilised by the firm, the salary paid to the Karta by the firm for services rendered by him to the firm cannot be assessed as income of the family. In other words, there must be a real and sufficient connection shown between the joint family funds and the salary paid by the firm to the Karta of the firm in which he is a partner. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was paid to the Karta because the assets of the family were utilised by the firm. There was no real and sufficient connection shown between joint family funds and the remuneration received by the Karta. In the absence of such a connection being shown, it cannot be said that the salary income was earned on account of any determent to the joint family assets. The AAC s factual finding indicate a contrary position i.e., services were rendered by Rajesh in his individual capacity to the firm. 7. The further objection of the Revenue in this case is that the AAC having held that salary of Rs. 13,099 was unreasonable, the entire salary income should have been to be assessable in the hands of the assessee-family (so far as the assessee is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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