9911796707
TMI Blog1981 (9) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... tment in these companies by the family, but due to the individual service rendered by Shri V. S. Thyagaraja Mudaliar and should not be taxed in the assessment of the assessee Hindu undivided family ? " Shri Thyagaraja Mudaliar belongs to an affluent family in the Thanjavur District. There was an HUF consisting of himself, his wife, his sons and others. There was a partition in this family when his sons became separated and thereafter from the assessment year 1970-71 he has been assessed in the status of an HUF consisting of himself and his unmarried daughter. Thyagaraja Mudaliar was receiving a remuneration of Rs. 42,000 per annum as managing director from M/s. Trichy Distilleries and Chemicals Ltd. and a sum of Rs. 36,000 per annum as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yagaraja Mudaliar was commensurate with the vast experience and the services rendered by him to the company and that the mere circumstance that he was a member of the family which had invested funds of the family from out of the family funds would not result in the remuneration received being (liable to be) taxed as the income of the HUF. The result was that the assessee's claim that the remuneration was assessable in the hands of the individual, Thyagaraja Mudaliar, succeeded. The amounts were, therefore, deleted or excluded from the assessment of the HUF, and were directed to be assessed in the hands of the individual. The Commissioner of Income-tax has obtained a reference on the above question. There are four tax cases because there are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgments of the Supreme Court in Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33. In that case, the assessee was an HUF. It was allotted considerable shares in a company which had taken over certain businesses of the larger family which was partitioned among the several components. The karta was the managing director in some of the companies and the question that arose for the decision of the Supreme Court was, whether the income was liable to be assessed in the hands of the HUF or in the hands of the erstwhile karta as an individual. At pp. 43, 44 of the report, the Supreme Court refers to the several tests enumerated that are to be applied in this connection and they are: " The other tests enumerated are (1) Whether the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Hindu undivided family." Applying these tests in that particular case, the Supreme Court held that the income in question was the individual income of Rajkumar who was the " karta " of the family and who was the managing director in several companies. It was pointed out that he had not become the managing director of the firm for the mere reason that his family had purchased considerable shares in the firm and he had been elected as the managing director by the board. In the light of the tests enunciated by the Supreme Court, the only matter that is required to be considered is, whether the remuneration paid to Thyagaraja Mudaliar arose from the holding of shares in the respective companies or is traceable to the investment by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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