Law:

Section:

Section 15 of the Income-tax Act, 1961 [Corresponding to section 7 of the Indian Income-tax Act, 1922] - Salaries - Chargeable as - Assessment year 1951-52 - One 'S' was a member of a appellant/assessee Hindu Undivided Family - He was appointed as treasurer of bank, for which he had furnished security of certain properties of Hindu Undivided Family - As a treasurer he had received certain sum from bank - Authorities below took view that emoluments received by 'S' were profits and gains of business which belonged to assessee-HUF - On instant appeal, it was, however, seen from records that mere ability of 'S' to furnish substantial security was not sole reason for his being appointed as treasurer of bank - On other hand his previous experience as an oversear of bank and his being appointed on his applying for post were indicative of personal fitness for it - Besides, there was nothing to show that 'S' had received any particular training at expense of family funds - Whether, in aforesaid circumstances, emoluments received by 'S' were in nature of salary and, therefore, assessable under section 7 of 1922 Act and not under section 10 of 1922 Act as profits and gains of business and salary was income of individual, i.e., 'S', and not income of Hindu undivided family - Held, yes FACTS The appellant assessee was a Hindu undivided family, consisted of 'S' and his younger brother. 'S' was appointed treasurer of the bank at Delhi and sixteen other branches of the bank. As treasurer, he furnished security to the bank of certain properties of the Hindu undivided family. As treasurer, 'S' received certain sum from the bank. The income-tax authorities held this sum to be the income of HUF and taxed it as such. The Tribunal in upholding this view also held that the emoluments received by the treasurer were profits and gains of business and it further held that as the security furnished by 'S' came out of the joint family properties, the emoluments could not be said to have been earned without detriment to the family property and therefore were part of the income of the Hindu undivided family. On reference, the High Court held that the relationship between 'S' and the Bank was…

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