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TMI Blog1980 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu family carrying on business in the name and style of "Kohinoor General Industries". Earlier, up to the assessment year 1959-60, the business was carried on by a bigger HUF consisting of Sri Ram Lal Kakkar, his two sons, Basant Veer Kakkar and Pratap Veer Kakkar. Thereafter, a partial partition took place in the family and the business was taken over by a partnership firm which carried on the business in the same name in the accounting year relating to the assessment year 1960-61. In July, 1961, the partnership was taken over by a private limited company. The share capital of Rs. 5,00,000 was divided into 5,000 equity shares of Rs. 100 each. The three erstwhile partners, Sri Ram Lal Kakkar, Sri Basant Veer Kakkar and Sri Pratap Veer K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case, was right in holding that the salary received by the assessee was the income of the Hindu undivided family of which the assessee was the karta and not his individual income ?" This court by its order dated May 2, 1975 (Pratap Veer Kakkar v. CIT [1977] 107 ITR 435) answered the question in the affirmative and in favour of the department. The controversy subsided for a short time, but it again surfaced in the assessment years 1967-68, 1969-70 and 1971-72. On the ITO holding that the salary of the directors had to be included in the income of the respective HUFs, the assessee filed appeals. The AAC allowed the appeals holding that the salary income was the individual income of the directors. The department pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant Veer Kakkar was conducting, managing and supervising all work connected with the purchase of raw material and sale of products manufactured by the company. He also looked after the secretarial jobs and managed the office and looked after legal matters including taxation. So far as the assessee, Sri Pratap Veer Kakkar, was concerned, he was appointed as works manager, and made in charge of production, appointment of workmen and their deployment on jobs. He also worked as liaison officer on behalf of the company, and kept watch on the sufficiency of stocks and raw materials. The company had also issued a certificate to these two directors that they had actually rendered service. It further found that the other employees in the company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the aforementioned decisions but none of them, excepting Kalu Babu's case [1959] 37 ITR 123 (SC), makes reference to the observations of Lord Sumner in Gokul Chand's case [1921] AIR 1921 PC 35, that 'in considering whether gains are partible, there is no valid distinction between the direct use of the joint family funds and a use which qualifies the member to make the gains by his own efforts'. We think that principle is no more valid. The other tests enumerated are : (1) whether the income received by a coparcener of a Hindu undivided family as remuneration had any real connection with the investment of the joint family funds ; (2) whether the income received was directly related to any utiliastion of family assets; (3) whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience and technical know-how. As has been seen, the assessee was working as works-manager and in-charge of production and looking after appointment of workmen in the employment of the company. He also worked as liaison officer on behalf of the company and kept watch on the stocks and raw materials. It has also found that the payments made were not to the detriment of the interest of HUF as the HUF was getting dividends on its shares. These findings bring the case within the dictum of Hukam Chand's case [1970] 78 ITR 33 (SC), but counsel for the revenue has urged that this is not. He relied upon the decision of this court given in the case of this very assessee, for an earlier year, Pratap Veer Kakkar v. CIT [1977] 107 ITR 435. In that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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