BIMAL KUMAR JAIN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act ').

(2.) THE assessee, Bimal Kumar Jain, was a director and the general manger of a company, known as Jain Glass Works Private Ltd., Firozabad. For the assessment year 1964 -65 he filed two returns, one in the status of a Hindu undivided family showing an income of Rs. 29,398 and the other in his individual capacity showing an income of Rs. 26,048. This amount of Rs. 26,048 was received by him from the company by way of remuneration. Thus, the assessee put forward the claim that the income which he had received from the company by way of remuneration should not be includedin the income received by his family from dividends on shares held in the company. This claim of the assessee was rejected by the Income -tax Officer holding that the entire income was to be assessed in the hands of the Hindu undivided family. His appeals to the Appellate Assistant Commissioner of Income -tax and to the Income -tax Appellate Tribunal failed. At his request the Income -tax Appellate Tribunal has referred the following question for our opinion ;

(3.) ADMITTEDLY , the shares which qualified the assessee to become a director of the company were purchased with the funds of the joint Hindu family and, as such, any income earned by him in his capacity as the director of the company would belong to the Hindu undivided family. But it is argued that the salary received by the assessee from the company was by virtue of his holding the post of the general manager and not on account of his being the director. The Tribunal has not accepted this contention and the only question that arises for consideration is as to whether the Tribunal was right in doing so.