JUDGMENT : P.N. Bhagwati, J. These two references arise out of assessments to income-tax made on the assessee for the assessment years 1960-61 to 1965-66 for which the relevant accounting years were the financial years ending on 31st March, 1960, to 31st March, 1965. The assessee in each reference is a Hindu undivided family. One Vidyasagar is the karta of the Hindu undivided family in Income-tax Reference No. 50 of 1970, while one Prafulkumar is the karta of the Hindu undivided family in Income-tax Reference No. 54 of 1970. Vidyasagar and Prafulkumar are the sons of one Jethabahi. Jethabhai had four sons, namely, Kantidev, Arvindkumar, Vidyasagar and Prafulkumar and they constituted a Hindu undivided family. This Hindu undivided family was disrupted by partition on 27th September, 1948, and the business, which was till then being carried on by it as joint family business, was converted into partnership business with Jethabhai and his four sons as partners. The partnership of Jethabhai and his four sons carried on the business but it ran into heavy losses and a large amount had to be borrowed by it from one Rambhai. Ultimately, the partnership was reconstituted by the admission of Rambhai as a partner and the reconstituted partnership came into being from 1st January, 1953. Rambhai was given a share of 25 per cent. in the profits and losses of the partnership while the shares of the other partners were 30 per cent. for Jethabhai and 11+ per cent. for each of the four sons of Jethabhai. Jethabhai and Rambhai both died in the year 1953, and the partnership was again reconstituted and the partners in the reconstituted partnership were the four sons of Jethabhai and Mahendrakumar, the son of Rambhai. The share of Mahendrakumar in the profits and losses of the partnership was four annas while the remaining twelve annas share was divided equally amongst the four sons of Jethabhai. It was common ground between the parties that each of the four sons of Jethabhai was a partner in the partnership as representing his Hindu undivided family and the amount of profit or loss coming to the share of each of them was treated as belonging to his Hindu undivided family. It was common ground between the parties that each of the four sons of Jethabhai was a partner in the partnership as representing his Hindu undivided family and the amount of profit or loss coming to the share of each of them was treated as belonging to his Hindu undivided family. This state of affairs continued for about 3+ years until a private limited company was floated by the four sons of Jethabhai and Mahendrakumar for the purpose of taking over the business of the partnership. The name of the company was N.S.P. Straw and Paper Products Private Ltd. and it was incorporated on or about 1st August, 1957. The company had an issued share capital consisting of 1,200 shares of the face value of Rs. 1,000 each and in consideration of taking over the business of the partnership, the company allotted 300 shares to Mahendrakumar and 225 shares to each of the four sons of Jethabhai. The first directors of the company were appointed by article 18 of the articles of association of the company and they were Kantidev, Vidyasagar, Prafulkumar and Mahendrakumar, and Arvindkumar who, it appears, had by that time become a medical practitioner, was appointed an alternate director of Prafulkumar. It was provided in article 18 that each of these four directors shall be a permanent director until he dies, resigns or becomes incapable of acting. Article 19 provides for remuneration of directors and it was in the following terms : "19. (a) The remuneration of each director shall be such sum not exceeding Rs. 100 (one hundred rupees) for every meeting of the board attended by him as may be decided from time to time by the board of directors. (b) If any director being willing shall be called upon to perform extra services for the purposes of the company, the company shall remunerate such director or directors (including managing director) by a fixed sum as may be determined by the directors from time to time." 2. The parenthetical clause "including managing director" was added in article 19, clause (b), because Kantidev was designated as managing director in article 18. There was no provision in the article appointing Vidyasagar as joint managing director but it appears that at the first meeting of the board of directors held on 2nd August, 1957, a resolution was passed which impliedly recognised Vidyasagar as joint managing director. There was no provision in the article appointing Vidyasagar as joint managing director but it appears that at the first meeting of the board of directors held on 2nd August, 1957, a resolution was passed which impliedly recognised Vidyasagar as joint managing director. This resolution provided that the remuneration of managing director and joint managing director shall be Rs. 2,000 and Rs. 1,500, respectively, per month. The widest possible powers were conferred on the managing director and joint managing director under article 20 and the entire management of the affairs of the company was entrusted to them. Kantidev and Vidyasagar thereafter managed the affairs of the company as managing director and joint managing director, respectively, and the company prospered under their management. 3. We are concerned in Income-tax Reference No. 50 with the case of Vidyasagar and we shall, therefore, first state the facts in regard to him. So far as Vidyasagar is concerned, he received, during the account year relevant to the assessment year 1960-61, an aggregate sum of Rs. 18,000 by way of remuneration as joint managing director and an aggregate sum of Rs. 1,000 as fees for attending the meetings of the directors. The total amount of the fees for attending the meetings of the directors remained the same during the account years relevant to the assessment years 1961-62 to 1965-66 but the amount of the remuneration went on progressively increasing until it reached the figure of Rs. 27,750 in the account year relevant to the assessment year 1965-66. The amount of the remuneration as joint managing director as also the fees for attending the meetings of the directors were originally assessed as the individual income of Vidyasagar for the assessment years 1960-61, 1961-62 and 1962-63 but the Income-tax Officer subsequently reopened the assessments of the Hindu undivided family of Vidyasagar under section 147(b) and included these items of income in the assessments of the Hindu undivided family of Vidyasagar. The Income-tax Officer also assessed the amount of remuneration and fees for attending the meetings of the board of directors received by Vidyasagar for the assessment years 1963-64, 1964-65 and 1965-66, as belonging to his Hindu undivided family and brought them to tax in the hands of his Hindu undivided family. The Income-tax Officer also assessed the amount of remuneration and fees for attending the meetings of the board of directors received by Vidyasagar for the assessment years 1963-64, 1964-65 and 1965-66, as belonging to his Hindu undivided family and brought them to tax in the hands of his Hindu undivided family. The Hindu undivided family of Vidyasagar appealed against the orders of reassessment for the assessment years 1960-61, 1961-62 and 1962-63 and the orders of assessment for the assessment years 1963-64, 1964-65 and 1965-66 to the Appellate Assistant Commissioner but the appeals were unsuccessful and the assessments were confirmed. The Hindu undivided family of Vidyasagar thereupon preferred further appeals to the Tribunal. The Tribunal rejected the contention of the Hindu undivided family of Vidyasagar that the Income-tax Officer had no jurisdiction to reopen the assessment for the assessment years 1960-61, 1961-62 and 1962-63 under section 147(b) and also held contrary to the contention of the Hindu undivided family of Vidyasagar, that the fees received by Vidyasagar for attending the meetings of the board of directors were the income of the Hindu undivided family of Vidyasagar but so far as the amount of remuneration received by Vidyasagar as joint managing director during the relevant account years was concerned, the Tribunal found that it was income received by Vidyasagar for services rendered by him to the company as joint managing director and there was no real and sufficient connection between the remuneration received by him and the assets of the Hindu undivided family invested in the company. The Tribunal in this view of the matter directed that the amount of remuneration received by Vidyasagar as joint managing director during the relevant account years should be excluded from the assessments of the Hindu undivided family of Vidyasagar for the assessment years 1960-61 to 1965-66. The revenue was aggrieved by this view taken by the Tribunal in so far as it went against it and it, therefore, made an application for a reference to the Tribunal and on the application, the Tribunal referred the following question of law for the opinion of this court : "Whether, on the facts and circumstances of the case, the finding that the remuneration earned by Shri Vidyasagar was his individual income is justified ? " 4. " 4. The Hindu undivided family of Vidyasagar submitted to the Tribunal at the hearing of the reference application that the question as to the validity of initiation of the proceedings under section 147(b) for the assessment years 1960-61, 1961-62 and 1962-63 also arose out of the order of the Tribunal and must, therefore, be referred to this court. The Tribunal, accordingly, referred the following additional question of law at the instance of the Hindu undivided family of Vidyasagar. "Whether for the assessment years 1960-61 to 1962-63 proceedings under section 147(b) were validily initiated ? " 5. So far as the Income-tax Reference No. 54 of 1970 is concerned, that relates to the case of Prafulkumar and we will now state the facts in regard to him. Prafulkumar was a permanent director appointed under article 18 of the articles of association, but no extra work was entrusted to him at the commencement of the company, presumably because he was studying at that time. Prafulkumar, after passing his S. S.C. Examination, entered M.S. University of Baroda and joined the degree course in engineering after qualifying for admission to that course. He studied for the degree course in mechanical engineering but left it after two years without obtaining a degree. He then joined the company and started looking after the mechanical and electrical side of the factory of the company as an engineer and technical director from 1st January, 1959. The annual general meeting of the company passed a resolution on 30th September, 1959, resolving that having regard to the nature of the services which were being rendered by Prafulkumar, he should be given the pay scale of Rs. 750-75-1,500 per month. Prafulkumar, accordingly, received from the company during the account year relevant to the assessment year 1961-62, an aggregate sum of Rs. 10.125 by way of remuneration as engineer and technical director and an aggregate sum of Rs. 1,000 by way of fees for attending the meetings of the board of directors. The amount of fees for attending the meetings of the board of directors remained the same during the account years relevant to the subsequent assessment years 1962-63 to 1965-66, but the amount of remuneration as engineer and technical director went on progressively increasing and it reached the figure of Rs. 22,950 in the account year relevant to the assessment year 1965-66. 22,950 in the account year relevant to the assessment year 1965-66. The amount of remuneration as engineer and technical director and the fees for attending the meetings of the board of directors received by Prafulkumar were claimed by the revenue to be income of the Hindu undivided family of Prafulkumar and not his individual income and they were accordingly sought to be included in the assessments of the Hindu undivided family of Prafulkumar for the assessment years 1961-62 to 1965-66. The assessments of the Hindu undivided family of Prafulkumar followed the same pattern as in the case of the Hindu undivided family of Vidyasagar and the same view was taken by the Tribunal in regard to the assessability of the amount of remuneration and fees for attending the meetings of the board of directors received by Prafulkumar as was taken in the case of the Hindu undivided family of Vidyasagar. The same two questions accordingly came to be referred by the Tribunal to this court at the instance of the revenue as well as the Hindu undivided family of Prafulkumar and they are as follows : "(1) Whether, on the facts and in the circumstances of the case, the finding that the remuneration earned by Shri Prafulkumar was his individual income is justified ? (2) Whether for the assessment years 1961-62 and 1962-63 proceedings under section 147(b) were validly initiated ? " 6. We are of the view that the Tribunal was right in holding that the amount of remuneration received by Vidyasagar as joint managing director was his individual income and not the income of his Hindu undivided family and, therefore, it is unnecessary for us to decide the second question as regards the validity of the initiation of proceedings under section 147(b) which has been referred to us in Income-tax Reference No. 50 of 1970. So also it is unnecessary for us to decide the second question referred to us in Income-tax Reference No. 54 of 1970 because we are of the opinion that, in the case of Prafulkumar too, the amount of remuneration received by him as engineer and technical director was his individual income and not the income of his Hindu undivided family. 7. 7. The point which arises for consideration in both these references under the first question is whether remuneration earned by a member of a Hindu undivided family as an officer of a company or a firm, in which the assets of the Hindu undivided family have been invested, is the income of the Hindu undivided family or the individual income of the member. This point has come up for consideration before the Supreme Court on a number of occasions and the decisions which have been given from time to time are broadly divisible into two categories, one sustaining the view-point that the remuneration earned by the member is his individual income, while the other sustaining the view-point that the income belongs to his Hindu undivided family. The result is that whenever a question of this kind arises before the courts, the counsel for the assessee always cites decisions belonging to one category while the counsel for the revenue cites decisions belonging to the other. The same pattern obtains in the present case and we were taken through all these decisions by the learned counsel for the parties, each seeking to draw support from one category of decisions or the other in indication of his point of view, but we do not think it necessary to examine these decisions in detail for we find that that the task has been undertaken, and, if we may say so with respect, very ably and lucidly carried out by the Supreme Court in Rajkumar Singh Hukam Chandji v. Commissioner of Income-tax, [1970] 78 I.T.R. 33, 43, 44 ; [1971] 1 S.C.R. 748 (S.C.). The Supreme Court in this case, which is, barring perhaps the decision in Prem Nath v. Commissioner of Income-tax, [1970] 78 I.T.R. 319, 327 (S.C.) the latest pronouncement on the subject, reviewed all its previous decisions and pointed out that though at first sight the line dividing the two categories of decisions might appear to be indistinct, it was very real and could be located on closer examination. The Supreme Court stated that in order to find out whether "a given income is that of the person to whom it is purported to have been given or that of his family" several tests have been laid down in these decisions and enumerated them as follows : (1) whether the income received by a coparcener of a Hindu undivided family as remuneration had any real connection with the investment of the joint family funds, (2) whether the income received was directly related to any utilization of family assets, (3) whether the family had suffered any detriment in the process of realization of the income, and (4) whether the income was received with the aid and assistance of the family funds. 8. The Supreme Court then evolved from these subsidiary principles a broad test for determining as to when remuneration earned by a member of a Hindu undivided family as an officer of a company or firm can be said to be his undivided income and when it can be said to be the income of his Hindu undivided family and formulated it in these words : " . . . the broader principle that emerges is whether the remuneration received by the coparcener in substance though not in form was but one of the modes of return made to the family because of the investment of the family funds in the business or whether it was a compensation made for the services rendered by the individual coparcener. If it is the former, it is an income of the Hindu undivided family but if it is the latter then it is the income of the individual coparcener. If the income was essentially earned as a result of the funds invested the fact that a coparcener has rendered some service would not change the character of the receipt. But, if on the other hand it is essentially a remuneration for the services rendered by a coparcener, the circumstance that his services were availed of because of the reason that he was a member of the family which had invested funds in that business or that he had obtained the qualification shares from out of the family funds would not make the receipt the income of the Hindu undivided family." 9. This test we must apply for the purpose of determining whether the amount of remuneration received by Vidyasagar was his individual income or the income of his Hindu undivided family and similarly also in the case of Prafulkumar. 10. We will first take up the case of Vidyasagar and examine whether the remuneration was paid to him essentially because of investment of the family funds in the company or whether it was essentially a compensation for the services rendered by him to the company. Now, it is true, and that cannot be gainsaid, that prior to the incorporation of the company, the business was carried on by the partnership consisting of the four sons of Jethabhai and Mahendrakumar and each of the four sons of Jethabhai represented his Hindu undivided family in the partnership. The share of each of the four sons of Jethabhai in the partnership belonged to his Hindu undivided family. The company was formed for the purpose of taking over the business which was being carried on by the partnership and in lieu of his share in the business which was taken over, the company issued 225 shares to each of the four sons of Jethabhai and 300 shares to Mahendrakumar and as part and parcel of the same scheme, three out of the four sons of Jethabhai, namely, Kantidev, Vidyasagar and Prafulkumar and Mahendrakumar were appointed permanent directors for life and Arvindkumar was appointed an alternate director to Prafulkumar. 225 shares obtained by each of the four sons of Jethabhai were, therefore, clearly joint family property in the hands of each of them and the permanent directorship being secured by reason of utilisation of joint family property in the shape of shares in the business was held by each of the four sons of Jethabhai in his capacity as karta of his Hindu undivided family. But, the question is, in what capacity was remuneration received by Vidyasagar as joint managing director. Was it received by way of return to the Hindu undivided family for the employment of joint family property or was it by way of compensation for the services as joint managing director rendered by Vidyasagar ? Now, when the company was formed and it took over the business as a going concern, some arrangement had to be made for managing and looking after the business. Now, when the company was formed and it took over the business as a going concern, some arrangement had to be made for managing and looking after the business. The board of directors, obviously, could not look after the day to day management of the affairs of the company and article 18 of the articles of association, therefore, provided that Kantidev should be appointed managing director of the company and the board of directors at the first meeting held on 2nd August, 1957, appointed, by necessary implication, Vidyasagar as joint managing director. It is not possible to accept the contention of the revenue that Vidyasagar was appointed joint managing director because of the utilisation of his joint family property in the shape of share in the business. It is not because of any outlay or expenditure of or detriment to the joint family property that he came to be appointed joint managing director. If the main reason for his appointment as joint managing director had been the taking over of the share of his Hindu undivided family in the business, the same reason would have also dictated appointment of Arvindkumar and Prafulkumar as joint managing directors or officers with some other designation, because they too had an equal share in the business which was taken over by the company. So also, Mahendrakumar would have been appointed some such officer because he too had four annas share in the business and that share was taken over by the company. It was not by way of return to the Hindu undivided family for utilisation of the joint family property that remuneration was given to Vidyasagar, because, if such had been the case, the property of the Hindu undivided family of each of the other three brothers being similarly utilised, remuneration would also have been paid to the other three brothers. It is a factor of great importance that out of the five partners whose shares in the business were taken over by the company, only two, namely, Kantidev and Vidyasagar, were appointed managing director and joint managing director respectively and no other partner was given any other remunerative office. This shows beyond doubt that remuneration was paid to Vidyasagar primarily and essentially for the services rendered by him as joint managing director and not because of utilisation of his joint family property in the shape of share in the business. This shows beyond doubt that remuneration was paid to Vidyasagar primarily and essentially for the services rendered by him as joint managing director and not because of utilisation of his joint family property in the shape of share in the business. It is in this important respect that the case of Vidyasagar differs from that decided by the Supreme Court in P.N. Krishna Iyer v. Commissioner of Income-tax where the business which was taken over by the company belonged wholly to one Hindu undivided family and Krishna Iyer, the karta of that Hindu undivided family, was appointed the governing director of the company. It is no doubt true, as pointed out on behalf of the revenue, that the office of permanent director was held by Vidyasagar in his capacity as karta of his Hindu undivided family, but from that it does not necessarily follow that if any extra work was entrusted to him for remuneration, he would be doing such extra work also in his capacity as karta of his Hindu undivided family. Doubtless, a managing director must be a director, but, as the definition of managing director in section 2(26) of the Companies Act, 1956, shows, a director would be a managing director only when substantial powers of management are entrusted to him which would not otherwise be exercisable by him. When substantial powers of management are entrusted to a director, the question would have to be considered whether such powers of management are entrusted to him as an individual or in his capacity as karta of his Hindu undivided family. That would always depend upon the facts and circumstances of each case and if the revenue wants to establish that it was in his capacity as a karta of the Hindu undivided family that he was entrusted with such powers of management and the remuneration paid to him must, therefore, be treated as the income of his Hindu undivided family, the burden of doing so must rest on the revenue. That is clear from the decision of the Supreme Court in Commissioner of Income-tax v. Gurunath V. Dhakappa, [1969] 72 I.T.R. 192, 193 (S.C.) where Shah J., speaking on behalf of the Supreme Court, pointed out that : "In the absence of a finding that the income which was received by G. V. Dhakappa was directly related to any assets of the family utilised in the partnership, the income cannot be treated as the income of the Hindu undivided family." 11. Here, there is nothing on the record of the case which would go to show that it was essentially by reason of utilisation of joint family property in the shape of share in the business that Vidyasagar was entrusted with substantial powers of management as joint managing director. On the contrary, the circumstance that only Kantidev and Vidyasagar were paid remuneration and not any of the other partners shows that the remuneration was paid essentially for services rendered to the company and not on account of any outlay or expenditure of or detriment to the joint family property. We are, therefore, of the view that the Tribunal was right in coming to the conclusion that the remuneration received by Vidyasagar was his individual income and not the income of his Hindu undivided family. 12. So far as the case of Prafulkumar is concerned it rests on a much firmer ground. It is no doubt true that Prafulkumar did not possess any educational qualification which would entitle him to rank as a technically qualified person because he did not complete his degree course in mechanical engineering and gave it up after studying for two years. But, the fact remains and that is evident from the record, that he joined the company and looked after the mechanical and electrical side of the factory as an engineer and technical director from 1st January, 1959. It is also on record that there was no other qualified engineer in the factory and the entire mechanical and electrical side of the factory was being attended by Prafulkumar. The remuneration paid to Prafulkumar for the period commencing from 1st January, 1959, was, therefore, clearly for the services rendered by him to the company as an engineer and technical director and not by way of return for utilisation of his joint family property in the shape of share in the business. The remuneration paid to Prafulkumar for the period commencing from 1st January, 1959, was, therefore, clearly for the services rendered by him to the company as an engineer and technical director and not by way of return for utilisation of his joint family property in the shape of share in the business. If any remuneration was intended to be paid to Prafulkumar on account of the joint family property in the share of the business contributed by his Hindu undivided family to the company, it could have been done immediately on the incorporation of the company. The company need not have waited till 1st January, 1959, in order to remunerate Prafulkumar. But the company did not sanction payment of any remuneration to Prafulkumar until 1st January, 1959, when Prafulkumar started serving the company as an engineer and technical director and that shows that the remuneration was paid to him primarily and essentially for the services rendered by him to the company. It may be that the services of Prafulkumar were availed of in preference to any other qualified person because of the reason that his Hindu undivided family had contributed its share in the business of the company, but from that it does not necessarily follow that the remuneration paid to him was on account of utilisation of joint family property. If it is found that the remuneration was primarily and essentially paid for the services rendered by Prafulkumar, it would be the individual income of Prafulkumar, and not that of his Hindu undivided family and the fact that the joint family property was invested in the company would not change the character of the receipt. The resolution of the annual general meeting of the company sanctioning remuneration to Prafulkumar as an engineer and technical director is clear and explicit and it clearly shows that Prafulkumar was acting as an engineer and technical director and was being remunerated for the services rendered by him to the company. The burden is on the revenue to show that what is apparent on the face of the resolution is not real and that the remuneration was paid to Prafulkumar by reason of utilisation of his joint family property in the shape of share in the business. The burden is on the revenue to show that what is apparent on the face of the resolution is not real and that the remuneration was paid to Prafulkumar by reason of utilisation of his joint family property in the shape of share in the business. This burden the revenue has failed to discharge and in the absence of any material to the contrary brought forward on behalf of the revenue, we must reach the conclusion that there was no direct or substantial connection between the remuneration earned by Prafulkumar and the joint family property invested in the company. Prafulkumar was not appointed an engineer and technical director as a result of any outlay or expenditure of or detriment to the joint family property. We, therefore, agree with the Tribunal that the income received by Prafulkumar was his individual income and not that of his Hindu undivided family. 13. We, accordingly, answer the first question in each of the references in the affirmative. The second question does not arise for consideration in view of the answer given by us to the first question and we do not, therefore, express any opinion upon it. The Commissioner will pay the costs of each reference to the assessee.