S. RM. CT. PL. PALANI APPA CHETTIAR vs THE COMMISSIONER OF INCOME-TAX, MADRAS

The Supreme Court held that the remuneration of a Managing Director, appointed from a Hindu undivided family's funds, cannot be treated as income of the family for tax purposes under the Indian Income-tax Act, 1922. The Court distinguished this case from C.I.T. West Bengal v. Kalu Babu Lal Chand, asserting that the shares were purchased for investment, not to facilitate the karta's directorship. Consequently, the High Court's ruling favoring the Revenue was overturned, affirming that the remuneration was not an accretion to the joint family's income.