Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu Undivided family - Assessable as - Assessment years 1964-65 to 1971-72 - Assessee as an individual besides owning shares in several companies, was also a managing director of company 'C' - By a declaration he threw all his shares including his shares in C into hotchpot of his HUF - However, said declaration did not refer to his remuneration as managing director receivable from C - Thereafter, vide a letter he requested C to credit managing director's remuneration and director's fees payable to him to HUF's account in its trading books which was accordingly done - Whether remuneration of assessee as managing director of C and director's sitting fees flowing from his appointment which was made at a time when shares of C were not HUF property could not be said to have been earned as a result of investment of HUF funds in shares of C - Held, yes - Whether neither assessee's letter nor entries in pursuance thereof constituted cogent and satisfactory evidence manifesting a deliberate volition and intentional conduct to treat his remuneration as coparcenary income - Held, yes - Whether, therefore, said letter did not create any right or overriding charge in remuneration received by assessee - Held, yes - Whether in absence of any enforceable right for receipt of income of remuneration or director's fee either against C or against assessee, said income could not be assessed in hands of HUF - Held, yes FACTS The assessee was being assessed in his status as individual and also as karta of his HUF. He, besides holding shares in several companies and a director in some of them, was appointed alongwith his mother, to manage the business and the affairs of a company 'C' on suitable remuneration. By a declaration, the assessee threw his shares into the hotchpot of his HUF, and wrote a letter to the company 'C' with the request to credit the managing director's remuneration and director's fees payable to him to the HUF's account in the company's trading books. Accordingly, the said income was credited to the account of his HUF from 1-3-1964 onwards. The ITO, however, included the said income in the assessment in his individual…

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