9911796707
TMI Blog1994 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal has rightly held that the salary income of the assessee from Savita Chemicals Pvt. Ltd. is assessable in the hands of the assessee in the status of 'individual' (sic) for each of the assessment years under consideration ?" The assessee, Shri N. K. Mehra, was director of a company known as Savita Chemicals Pvt. Ltd. for which he received salary from the said company. In his individual assessments for the assessment years 1972-73, 1973-74 and 1974-75, the assessee claimed before the Income-tax Officer that the above salary was assessable in the hands of the "Hindu undivided family of Shri N. K. Mehra " of which he was the karta and not in his hands as an individual. The Income-tax Officer did not accept this claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the contention of the assessee and held that the salary income of the assessee from Savita Chemicals Pvt. Ltd, was assessable in the hands of the Hindu undivided family. He, therefore, deleted the same from the individual assessment of the assessee for each of the assessment years under consideration. Aggrieved by the order of the Appellate Assistant Commissioner, the Revenue appealed to the Income-tax Appellate Tribunal ("the Tribunal"). The Tribunal, following its earlier decision in the case of the assessee himself in appeal against the assessment for the subsequent assessment year, viz., assessment year 1976-77, agreed with the Appellate Assistant Commissioner and held that the salary income of the assessee from the said company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndividual for the services rendered by him. It has no nexus whatsoever with the 440 shares held by him. In such a situation, in our opinion, the change of ownership of those shares from the assessee to the Hindu undivided family and the acquisition of further shares of the said company by the Hindu undivided family cannot make the receipt of salary by the assessee income of the Hindu undivided family. The test for determining whether the remuneration received by an individual is income of the individual or that of the Hindu undivided family of which he is a coparcener is well-settled by now. The broad principle to be followed for this purpose, as stated by the Supreme Court in Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33, is whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivided family property, by reason of the fact that on receipt of bonus shares and acquisition of further 1,000 shares, the family came to hold in all 1,990 shares of the said company. There is nothing to show that he held the directorship on behalf of the family or by reason of the shareholding of the family. On the contrary, from the facts of the case, it is clear beyond all doubts that he received the salary for the personal services rendered by him as in the past. In the premises, the income from salary received by him cannot be held to be the income of the Hindu undivided family. We are, therefore, of the clear opinion that it was the income of the assessee and it was rightly assessed by the Income-tax Officer as his individual income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee individual. Considering the facts of the case in the light of the well-settled principles governing such determination, we have already held that it was the income of the assessee individual and not of the Hindu undivided family. No question of diversion of income can arise in such a case. This court had occasion to consider the question whether there was a diversion of income by overriding title in CIT v. V. G. Bhuta [1993] 203 ITR 249. In that case, it was held that the true test for finding out if there has been diversion of income by an overriding charge is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment nor the continuance of the assessee as a director of the company was attributable to the shares of the company held by the Hindu undivided family. No judicial Tribunal, properly instructed, could have arrived at such a finding in the uncontroverted facts and circumstances of the case appearing on the face of the record. While deciding a question of law referred to it, the court need not act on such patently erroneous assumptions, based on a patently incorrect factual foundations. Such findings, in fact and in law, are no findings at all on which the opinion of the court on a question of law can be founded. In such a situation, the court can peruse the basic facts of the case set out in the order of the Tribunal and decide the legal con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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