The salary and fees received by a member of a Hindu undivided family from a private limited company in which the shares were acquired out of the assets of the family are the income of the Hindu undivided family.

1. This is a petition under section 66(2) of the Income-tax Act for directing the Tribunal to state the case on the following questions :

"1. Whether on the facts and in the circumstances of this case the wo sums of Rs. 5,100 and Rs. 200 received by Sri Mohan Tayal as managing directors salary and directors fees respectively from Tayal Bros. Ltd., by virtue of its board of directors resolution and in terms of the articles of association is his personal income or that of the Hindu undivided family of which he is the karta ?

2. Is there any material on record to hold that Sri Mohan Tayal, while acting as managing director of Tayal Bros. Ltd., was doing so as a representative of the Hindu undivided family of which he was the karta ?"

2. The petitioner, Sri Mohan Tayal, became a director of a private limited company in the year 1946 in which the shareholders are the petitioner himself, his wife, two of his brothers and the wife of one of the brothers. He had three hundred shares of the company in his name which admittedly were acquired out of the assets of the Hindu undivided family which consists of himself and his two sons. In the year 1955 the petitioner was appointed managing director of the company and he received a sum of Rs. 5,100 as remuneration during the assessment year in question, namely, 1956-57. He also received director fees amounting to Rs. 200. The Income-tax Officer assessed the income of the family of the petitioner including the remuneration received by him as managing director as also the directors fees as that of an individual. An appeal was taken to the Appellate Assistant Commissioner on the ground that the status of the petitioner was that of a Hindu undivided family and not "individual" and that the salary and directors fees received from the company should have been assessed separately in the individual capacity of the petitioner. The Appellate Assistant Commissioner accepted the first contention but declined to treat the salary and the directors fees as the income of the petitioner in his individual capacity. On appeal to the Income tax Appellate Tribunal against this part of the decision of the Appellate Assistant Commissioner, the Tribunal recorded a short order on 5th February, 1958, saying that the assessee was acting as the managing director in the capacity of karta of his Hindu undivided family and not in his capacity as an individual. Thus the salary and directors fees had been rightly included in the assessment of the Hindu undivided family. The Tribunal having declined to state the case and refer the questions of law which were sought to be raised, the present petition has been instituted in this court.

3. The learned counsel for the petitioner contends that although the shares of the company were acquired out of the assets of the Hindu undivided family consisting of the petitioner and his two sons, the petitioner was appointed as the managing director in his individual capacity and owing to his competency for carrying on the work of the managing director of the company. It is further submitting that there is no detriment to the assets of the Hindu undivided family which has resulted or can result by virtue of the petitioner holding the office of the managing director or director and thus the tests that have been laid down for deciding whether in such circumstances the remuneration earned as managing director or the fees paid to a director would be income in the hands of the Hindu undivided family or would be individual income have to be properly considered and applied in the present case and, consequently, the questions of law set out before arise out of the order of the Tribunal. Our attention has been called to Piyare Lal Adishwar Lal v. Commissioner of Income-tax, where Ss father was the treasurer of a bank until his death. After the fathers death, S was appointed treasurer of the bank. Properties of the Hindu undivided family of which he was a member were furnished by him as securi