JUDGMENT K. JAGANNATHA SHETTY, J. 1. Under s. 256(2) of the IT Act, 1961, the Tribunal has referred the following question: "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the salary income from the two firms, viz., M/s Mahalaxmi Beedi Works and M/s Bhandarkar Bros., to the assessee was not their individual income but was the income of the HUFs of which they were the Kartas and confirming the assessments of the said income in the hands of the respective HUFs ?" 2. The assessees are three divided brothers. They became partners of two firms representing their respective joint families. The firms were constituted as far back in 1962. Up to 1974, the partners were not drawing any remuneration for the services rendered by them in the firms. But, on March 31, 1974, the partners passed a resolution in the respective firms for payment of salary to each one of them w.e.f. April 1, 1974. They were accordingly paid remuneration more or less equal to the profitsharing ratio to which they are entitled under the deed of partnership. Before the ITO, the assessees claimed that such salary income from the firms should be treated as their individual income and should not be included and taxed in the hands of the HUF. The ITO rejected that contention and taxed the salary income from the two firms in the hands of the HUF. The appeals preferred by the assessees were rejected by the AAC who took the view that any partner in a firm has to work for the advancement of the business and the mere fact that some salary income is derived from the firm by the Karta would not entitle the partner/assessee to consider such income separately. 3. The assessees preferred further appeals before the Tribunal. The Tribunal also has concurred with the view taken by the AAC. The Tribunal in its brief order marked with clarity of thought has recorded the following findings : "....... the position is that the salary paid to the three partners is in substance a return made to the family because of the investment of the family funds in the business and is not really, though so stated in the agreement, the compensation for services rendered by the individual partners. The partners have no special qualification. the position is that the salary paid to the three partners is in substance a return made to the family because of the investment of the family funds in the business and is not really, though so stated in the agreement, the compensation for services rendered by the individual partners. The partners have no special qualification. They were doing the same thing previously when no salary was paid and they have been doing the same thing after the salary has been paid. There is no individual or special skill and experience of the partners which would justify the payment all of a sudden for their individual services under the resolution passed by the two firms. The salaries paid are also more or less in their profitsharing ratio except with a minor difference, since Shri P. N. Bhandarkar was paid a total sum of Rs. 1,000 p.m. and the other two partners have been paid Rs. 800 p.m. each. The narration in the resolutions that the salaries were paid for putting in extra efforts and exertion is really a self-serving statement because it cannot be said that till they were paid these salaries they were not putting in full effort and exertion in the conduct of the business. On the facts, I agree with the learned AAC that the payment of salary cannot be treated as the payment to the individual partners, but is really a mode of return to the family, for the investment of the HUF funds and the payment is to the detriment of the HUF and, therefore, is the income of the HUF and not of the individual partners" 4. The answer to the question raised, in our opinion, is not complex. Nor is it far removed from certainties. There is a string of decisions of the Supreme Court on the similar question beginning with the case in CIT vs. Kalu Babu Lal Chand (1959) 37 ITR 123 and ending with the case in Raj Kumar Singh Hukam Chandji vs. CIT (1970) 78 ITR 33 (SC). Nor is it far removed from certainties. There is a string of decisions of the Supreme Court on the similar question beginning with the case in CIT vs. Kalu Babu Lal Chand (1959) 37 ITR 123 and ending with the case in Raj Kumar Singh Hukam Chandji vs. CIT (1970) 78 ITR 33 (SC). In Krishna Iyer vs. CIT (1969) 73 ITR 539 (SC), Shah J., speaking for the Supreme Court, reviewed all the earlier decisions on the question of remuneration earned by a member of an HUF or as an officer of the company or the firm, and concluded thus : "Income received by a member of an HUF from firm or a company in which the funds of the HUF are invested, even though the income may be partially traceable to personal exertion of the member, is taxable as the income of the HUF, if it is earned by detriment to the family funds or with the aid or assistance of those funds; otherwise it is taxable as the member's separate income" Again, the Supreme Court speaking through justice Hegde in Raj Kumar, Singh's case (supra), reviewed all the decisions including the principles enunciated in Krishna Iyer's case (supra). The learned Judge summarised the principles as follows : "(1) whether the income received by a coparcener of an HUF 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. In our opinion, from these subsidiary principles, 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 HUF but if it is the latter, then it is the income of the individual coparcener. If it is the former, it is an income of the HUF 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 HUF" 5. The principles being thus clear, we shall now turn to the facts of the present case. 6. The firms are family partnerships. There are only three partners in each of the two firms. The partners are divided brothers. No stranger is a partner. They have become the partners by contributing the family funds as capital. They have not rendered any special service other than the services rendered by them from the commencement of the firm in 1962, till the date of receiving the remuneration in 1974. The partners do not possess any special qualification in the business, warranting the special remuneration paid to them. The remuneration was not paid either for their special knowledge, or for their special position in the firms like managing partner or a managing director in the company. All the three persons became partners by the investment of the family funds and continued as partners and partners only. They continued to discharge the same old duties with the same old responsibilities. The Tribunal has found, as a matter of fact, that the increase in the business turnover cannot be attributed to any extra service rendered by the partners.. The Tribunal has also found that the remuneration to the partners was more or less in the profitsharing ratio. More than that, the Tribunal, having regard to the substantial payments to all the three partners, found that it was detrimental to the family funds. This finding is justified in the sense that there were no other partners in the firms and, if the remuneration was not paid, such remuneration would have gone to the family as share income. 7. More than that, the Tribunal, having regard to the substantial payments to all the three partners, found that it was detrimental to the family funds. This finding is justified in the sense that there were no other partners in the firms and, if the remuneration was not paid, such remuneration would have gone to the family as share income. 7. Having regard to these findings, it appears to us that the conclusion reached by the Tribunal that the salary income of the assessees cannot be treated as their individual income is inescapable. As observed by the Supreme Court in Raj Kumar Singh's case (supra) that, 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. This principle squarely applies to the present case. Since there is no evidence to show that the partners have rendered any special services or acquired any special qualifications or occupied any special positions in regard to the business of the firm, the Tribunal is justified in taking the view that the salary income from the two firms should be treated as the income of the joint family. 8. The decision of this Court in Rajarathnam vs. CIT (1971) 80 ITR 705 (Mys), on which Mr. Bhat placed reliance in support of his contention, is clearly distinguishable. There it was found that there was no material to hold that the shares in question were purchased by Rajarathnam with the object of becoming a director of the company. It is well known that all shareholders with qualifying shares cannot become directors of a company. The position as to partners in firms is quite different. A person could become a partner only by contributing capital, unless he is taken as a working partner. In the result, we answer the question in the affirmative and against the assessees.