Judgment :- MISHRA J. The question which has been referred to the court at the instance of the assessee by the Tribunal relates to the assessment years 1977-78 and 1978-79, the relevant accounting years ending on March 31, 1977, and March 31, 1978, and arises from a common order of the Tribunal under which it has agreed with the Revenue that the disallowance of the interest payment under section 40(b) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") in the circumstances of the case is justified. The question referred to the court for its opinion is whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that as the beneficial owner of the share income and the recipient of the interest are the same, viz., S. P. Kotian, Hindu undivided family, the provisions of section 40(b) would be applicable to the interest paid to the aforesaid Hindu undivided family for the assessment years 1977-78 and 1978-79 ? The assessee is a firm carrying on business in the manufacture and sale of oil engines. Shri S. P. Kotian, in his individual capacity, was a partner in the assessee-firm from its inception on January 1, 1973. On April 1, 1974, he transferred his interest in the assessee-firm to his Hindu undivided family of which he was the karta. A declaration in this behalf was made by him on March 29, 1975, as under "1. From the said partnership-firm as on April 1, 1974, a sum of Rs. 5, 000 is due towards my capital account and Rs. 1, 14, 240.84 towards deposits made by me in the firm, I am entitled to one-third share in the profits of the firm 2. I state that the abovesaid amount from 1st April, 1974, and all future incomes arising out of these investments are the property of the joint Hindu undivided family, subject to the common rights of all the members of the family and I will not claim any individual rights over the sameThe partnership for the years under appeal was as constituted by the partnership deed dated April 1, 1974, for the period from April 1, 1976, to June 30, 1976, and the partnership deed dated July 1, 1976, for the period subsequent to July 1, 1976, after the induction of the two new partners. In these partnership deeds, Shri S. P. Kotian was described as representing his Hindu undivided family as its karta. Under the latter deed, the capital of the firm was envisaged at Rs. 1 lakh contributed by the five partners, i.e., Rs. 20, 000 each. Shri S. P. Kotian's accounts as in the books were as under Current account Capital account Rs. Rs As on 1-4-1974 Credit balance 1, 14, 240 5, 000" * 1-4-1975 1, 32, 158 5, 000 (including share income of Rs. 32, 314 for 1974-75) 93, 317 5, 000 (including share income of Rs. 32, 371 for 1975-76) On December 15, 1976, the aggregate of the share income of Rs. 68, 685 for the two years 1974-75 and 1975-76 was transferred from Shri S. P. Kotian's current account to a new account styled as S. P. Kotian Hindu undivided family-income deposit account. Interests of Rs. 15, 750 and Rs. 12, 665, respectively, were credited to this new account as on March 31, 1977, and March 31, 1978. After the above transfer, the closing balance of S. P. Kotian's current account was as under On 31-3-1977 --- Debit balance (overdrawn) of Rs. 27, 518 even after crediting share of profit of Rs. 24, 468 of 1976-77 On 31-3-1978 --- Debit balance of Rs. 39, 242 even after crediting share of profits of Rs. 38, 814 of 1977-78 On 31-3-1979 --- Debit balance of Rs. 69, 074 even after crediting share of profit of Rs. 35, 912 for the year 1978-79 The Income-tax Officer, however, added back the interest of Rs. 15, 750 and Rs. 12, 665 under section 40(b) of the Act. On the assessee's appeal, the Commissioner (Appeals) accepted his case stating, inter alia, as follows: "Now, in A. S. K. Rathnaswamy Nadar Firm v. CIT the Madras High Court has held that where a person represents a joint family in a partnership, interest paid to him would also be caught by the mischief of section 40(b). On the assessee's appeal, the Commissioner (Appeals) accepted his case stating, inter alia, as follows: "Now, in A. S. K. Rathnaswamy Nadar Firm v. CIT the Madras High Court has held that where a person represents a joint family in a partnership, interest paid to him would also be caught by the mischief of section 40(b). But the ratio decidendi in that case was that since in general law a joint Hindu family is not a 'person' the family as such could not be a 'partner' and, consequently, no distinction could be made between interest paid on the capital invested by a family in the firm and the interest paid on his own monies to the member of the family who represents the family in the partnership. In the instant case, however, the interest was not paid either on the capital contributed by the partner on behalf of the family, or on his separate funds advanced to the firm, but on monies belonging to a different taxable entity and the decision in Addl. CIT v. Vallamkonda Chinna Balaiah Chetty and Co. would hence apply here. In that case there was no stipulation in the partnership agreement in regard to the capital to be contributed by the partners. R was a partner admittedly as representing his family and the latter advanced money to the firm which was credited in R's name and interest was paid on the advance. In the previous year relevant to the assessment year 1968-69, the amount was transferred to R's family account : "It was held that the interest credited to the advances by the family" did not attract the provisions of section 40(b) and that the transfer to R's family account was intended to indicate the real state of affairs since the partners were not required to bring in any capital and not a device adopted to evade the application of section 40(b). In the appellant's case each partner was required to bring Rs. 20, 000 as his capital contribution, and there was no stipulation that the profits accruing from year to year were to be retained in the firm. The interest credited to the family's account was not therefore, a payment made to the partner as such but to the joint family." * The Tribunal, however, distinguished the case in Vallamkonda Chinna Balaiah Chetty and Co. The interest credited to the family's account was not therefore, a payment made to the partner as such but to the joint family." * The Tribunal, however, distinguished the case in Vallamkonda Chinna Balaiah Chetty and Co. in these words "The present case has to be similarly distinguished from the facts of Addl. CIT v. Vallamkonda Chinna Balaiah Chetty and Co. in which firstly there was no stipulation regarding capital unlike in the present case. Here, according to the partnership deed each partner was to contribute Rs. 20, 000 as his capital contribution. The 'capital contribution' of Shri Kotian for the years under appeal was Rs. 5, 000 up to March 31, 1976, thereafter enhanced to Rs. 20, 000 by transfer of Rs. 15, 000 from the current account after March 31, 1976. Secondly, the interest payment to the Hindu undivided family claimed for the two years is on the accrued share income of Rs. 68, 685 in respect of the years 197475 and 1975-76 carved out of Shri Kotian's current account and transferred to the Hindu undivided family income deposit account on December 15, 1976. This transfer has, however, in fact substantially eroded the Hindu undivided family accounts in the assessee-firm as will be seen from the fact that consequent on the transfer of Rs. 68, 685 to the newly opened Hindu undivided family account, Shri Kotian's current account has been converted into debit balance of Rs. 27, 518 on March 31, 1977, of Rs. 39, 242 on March 31, 1978, and of Rs. 69, 074 on March 31, 1979, even after crediting the share of profits of the respective years as described in paragraph 1 above. The assessee's case is, therefore, not one where the Hindu undivided family-partner in question had advanced separate monies and could be treated as a separate person and creditor as in the case of Addl. CIT v. Vallamhonda Chinna Balaiah Chetty and Co. on the other hand, the Hindu undivided family, instead of advancing separate and fresh moneys had actually merely divided and aggregated the amount of share income of the two years with a view to claim interest thereon, consequently, converting and undermining Shri Kotian's current account to an overdrawn account (debit balance). The assessee's case is, therefore, to be distinguished from Addl. CIT v. Vallamkonda Chinna Balaiah Chetty and Co. The assessee's case is, therefore, to be distinguished from Addl. CIT v. Vallamkonda Chinna Balaiah Chetty and Co. The Revenue urges that the beneficial partner in the firm is the Hindu undivided family and interest is also paid to the self-same Hindu undivided family on the amount diverted to the Hindu undivided family deposit account (by way of transfer of the accrued share income) and refers to the facts noted in the decision in Terla Veeraiah v. CIT. In that case one Terla Parasuramulu, his son, Veeriah, and grandson, Srisailam, who constituted one Hindu undivided family got themselves divided by a partition. After such partition the three divided members constituted themselves into a partnership firm. Parasuramulu died on January 9, 1969. The partnership continued even after his death. For the accounting years relevant to the assessment years 1970-71 and 1971-72, there were two accounts in the partnership firm. One account was relating to Veeriah as a partner of the firm. This account was styled as Terla Veeriah. This Veeriah being the sole legal heir of the deceased, Parasuramulu, became entitled to whatever amount that the deceased was entitled to the firm. The amount payable to Parasuramulu was credited in an account styled as 'Terla Veeriah's Hindu undivided family account. The amount credited to 'Terla Veeria's Hindu undivided family' account represented the interest paid to Veeriah as partner. The amount credited to Terla Veeriah's individual account represented the interest payable to Parasuramulu and inherited by Veeriah. The Income-tax Officer disallowed both these amounts under section 40(b). The disallowance of the amount paid to Terla Veeriah as partner and credited to Terla Veeriah's Hindu undivided family account was not disputed and the dispute related only to the amount credited to the account, Terla Veeriah's individual account, representing the interest payable to Parasuramulu. Thus, the disallowance of the first item of interest in this case Terla Veeraiah v. CIT being interest credited to the Hindu undivided family account of the partner, was not disputed at all, but accepted by the assessee. Thus, the disallowance of the first item of interest in this case Terla Veeraiah v. CIT being interest credited to the Hindu undivided family account of the partner, was not disputed at all, but accepted by the assessee. This disallowance is on par with the disallowance of the interest paid to the Hindu undivided family account, which we are called upon to consider in the present case, viz., the interest paid to Kotian-Hindu undivided family." * The Tribunal also took notice of section 64(2) of the Act as amended and held that the entire share income on the facts of the case was deemed income of S. P. Kotian even if it was the income credited to the Hindu undivided family An issue similar to the one in the instant case had fallen for consideration by a Full Bench of the Patna High Court (CIT v. Atma Rant Budhia of which one of us (Mishra J.) was a member. One Shri Atma Ram Budhia was being assessed in the status of a Hindu undivided family as well as "individual". Budhia was also a partner in the firm, R. K. Budhia and Co., in his capacity as karta of his Hindu undivided family. The Income-tax Officer while making the assessment of the assessee-Hindu undivided family included the share income received from the firm, R. K. Budhia and Co., as per the allocation as well as the salary paid to Shri Budhia to the extent of Rs. 30, 602 which included salary income of Rs. 18, 000. The Income-tax Officer included the salary income of Rs. 18, 000 as income of the Hindu undivided family. Shri Budhia appealed against the said inclusion on the ground that the firm was paying the salary to him in his individual capacity. The appellate authority held in favour of Shri Budhia that the salary amount of Rs. 18, 000 assessable in his hands in the status of an individual. The Revenue appealed to the Tribunal. The Tribunal dismissed the Revenue's appeal. The court in the said case observed on the said facts as follows "In view of the law since settled and concluded, the circumstances that his services were availed of because of the reason that he was a member of the family which had invested funds in the business of the firm, is of no consequence. The court in the said case observed on the said facts as follows "In view of the law since settled and concluded, the circumstances that his services were availed of because of the reason that he was a member of the family which had invested funds in the business of the firm, is of no consequence. There being no material to show that Shri Budhia was appointed for service on behalf of the family or as a result of any outlay or expenditure or detriment to the family property, or that his appointment was linked with the acquisition of the business, it has to be held that his employment was an employment of personal responsibility and ability and the remuneration paid to him is in lieu of the contract of service." * A reference is made in the said case to the judgment in CIT v. R. M. Chidambaram Pillai which is a judgment of two learned judges of the Supreme Court and upon which reliance was heavily placed on behalf of the Revenue, in which there are observations to the effect that a contract of employment required two distinct persons, viz., the employer and the employee, and that there could not be a contract of service, in strict law, between a firm and one of its partners, and a payment of salary to a partner represents a special share of the profits and that salary paid to a partner retains the same character as the income of the firm. It is also observed (at page 295) : "so that any agreement for remuneration of a partner for taking part in the conduct of the business must be regarded as a portion of the profits being made over as a reward for the human capital brought in" * The Patna High Court's judgment contains observations as follows (at page 247 of 146 ITR) "In the case of CIT v. R. M. Chidambaram Pillai there are words which appear to give an impression that any agreement for remuneration of a partner for taking part in the conduct of the business must be regarded as his portion of the profits being made over as reward for the human capital brought in by a partner. It has been observed in the said case that partnership is a certain relation between persons, the product of agreement to share the profits of a business. It has been observed in the said case that partnership is a certain relation between persons, the product of agreement to share the profits of a business. 'Firm' is a collective noun, and a compendious expression to designate an entity, not a person ; in income-tax law a firm is a unit of assessment, by special provisions, but is not a full person which leads to the next step that since a contract of employment requires two distinct persons, viz., the employer and the employee, there cannot be a contract of service in strict law between a firm and one of its partners ; and any agreement for remuneration of a partner for taking part in the conduct of the business must be regarded as a portion of the profits being made over as a reward for the human capital brought in Honourable Krishna Iyer J., who delivered the judgment on behalf of the court, while considering sections 10 and 16 of the Indian Income-tax Act, 1922, the new provisions being sections 40 and 67 of the Income-tax Act, 1961, has pronounced' The anatomy of the provision is obvious, even if the explanation or motivation for it may be more than one. It is implicit that the share income of the partner takes in his salary. The telling test is that where a firm suffers loss the salaried partner's share in it goes to depress his share of income. Surely, therefore, salary is a different label for profits, in the context of a partner's remuneration'." * Krishna Iyer J., was, however, not considering a case of a karta of a Hindu undivided family holding a salaried post in the firm in which the Hindu undivided family was a partner. None of the cases decided by the Supreme Court laying down the law in regard to the remuneration paid to a member of the Hindu undivided family for the services rendered by him to the firm of which the family is a partner were referred to or even casually adverted to by him (Krishna Iyer J.) as, obviously, the question for consideration in the case before him was completely different. The view taken by the Supreme Court in the cases of Raj Kumar Singh Hukam Chandji v. CIT; Prem Nath v. CIT; CIT v. Gurunath V Dhakappa; V. D. Dhanwatey v. CIT and CIT v. D. C. Shah are all authorities being judgments of the Supreme Court of India for the principle that in the absence of any evidence that the remuneration agreed to be paid was not for the services rendered to the firm but was a profit in lieu of the investment of the family funds in the business, the irresistible conclusion will be that the salary/remuneration paid to an individual member of the family was not the income of the family, but was in consideration of the contract of service and by way of compensation for services rendered by him. "Section 40(b) of the Act reads as follows " 40. Amounts not deductible. --- Notwithstanding anything to the contrary in sections 30 to 39, the following amounts shall not be deducted in computing the income chargeable under the head 'Profits and gains of business or profession', --- (b) in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm. " " Interest"is used along with salary, bonus, commission or remuneration, payment of which to any partner of the firm is not deductible in computing the income chargeable under the head "Profits and gains of business or profession", although in case any such payment is made to an employee it is deductible. In the case of a partner, who represents the interests of the Hindu undivided family, as the Patna High Court has pointed out," * the assessee being a partner in his capacity as the karta of his Hindu undivided family will not affect his individual capacity to receive the salary, etc., and in such a case, the amount received in lieu of service will not be a share of profit of the family ; it will be his individual income for services rendered by him personally to the firm. The telling test, however, is whether the agreement to a partner for taking part in the conduct of the business should be regarded as a portion of the profits being made over as reward for the human capital brought in and in the circumstances not satisfying the condition of a contract of service between the firm on the one hand and the partner concerned as an individual on the other, would vary the amount of interest, salary or remuneration with the profit or loss made or incurred by the firm. It is in this sense that the observations in R. M. Chidambaram Pillai's case are relevant "The telling test is that where a firm suffers loss the salaried partner's share in it goes to depress his share of income. Surely, therefore, salary is a different label for profits, in the context of a partner's remuneration." * In CIT v. London Machinery Co. a Bench of the Allahabad High Court has considered a case of payment of interest to the partners who constituted the firm acting as kartas of their respective Hindu undivided families. The Hindu undivided families contributed capital, but the partnership deed provided that no interest shall be paid on it unless the partners agreed otherwise. Four other partners in the firm, however, entered the firm in their individual capacities. The three kartapartners deposited funds belonging to each of them in their individual capacity in the accounts of the firm. The firm paid to each of them interest amounting to a total of Rs. 20, 966 as individuals. The firm claimed deduction of this amount as business expenditure. The Income-tax Officer disallowed it. The disallowance was upheld on appeal. The assessee took the matter to the Tribunal. The Tribunal considered the matter elaborately and held that the three kartas were partners in the firm as representing their Hindu undivided families. The deposits were made by them from their own personal funds. The firm paid interest to them in their individual capacity and not as representing their Hindu undivided families. Since these three persons were partners in a different capacity, that is, as the kartas, the interest paid to them as individuals could not be held to be payment to a partner of the firm. At the instance of the Revenue, the reference reached the High Court. Since these three persons were partners in a different capacity, that is, as the kartas, the interest paid to them as individuals could not be held to be payment to a partner of the firm. At the instance of the Revenue, the reference reached the High Court. The Allahabad High Court made a specific reference to the judgments of the Supreme Court in the case of Firm Bhagat Ram Mohanlal v. CEPT; CIT v. Bagyalakshmi and Co.; Agarval and Co. v. CIT; CIT v. Kalu Babu Lal Chand; Ram Laxman Sugar Mills v. CIT and the judgments of the various High Courts in A. S. K. Rathnaswamy Nadar Firm v. CIT. The Allahabad High Court has concluded "In our view, the interest paid by the firm to the partners either on the amounts brought by them from their respective Hindu undivided family funds, or brought from their own individual funds is in either case payment of interest to the partners. Both these kinds of payments are within the purview of section 40(b), and are inadmissible as a deduction in the assessment of the firm Besides the above, the Allahabad High Court took notice of the two judgments of the Supreme Court one in the case of Dhanwatey (V D.) v. CIT and the other in the case of CIT v. Guruunath V. Dhakappa. In V. D. Dhanwatey's case the Supreme Court has held that the remuneration paid by the firm to the assessee was directly related to the investment in the partnership business from the assets of the family. There was real and sufficient connection between investment from the joint family funds and the remuneration paid to the assessee. The salary paid to the assessee by the firm was, therefore, assessable as the income of the Hindu undivided family. In Gurunath V. Dhakappa's case the Supreme Court has held that in the absence of a finding that the salary received by the managing partner (who was also the karta of his Hindu undivided family) was directly related to any assets of the family being utilised in the firm, the payment of salary to him could not be treated as the income of the Hindu undivided family. In brief, the Allahabad High Court found payment of interest comparable to payment of salary, remuneration and in case of such payment to the partner, whether he represented his Hindu undivided family as the karta or not, held that the interest paid by the firm to the partners either on the amounts brought by them from their respective Hindu undivided family funds, or brought from their own individual funds is in either case payment of interest to the partners and fell within the purview of section 40(b) and was inadmissible as a deduction in the hands of the firmIt is not difficult, however, to see the reason why the Allahabad High Court took the above view. The above view is taken only as a consequence of the conclusion that the definition of the word "person" occurring in section 2(9) of the Act cannot be imported into the Partnership Act, the provisions of which alone are relevant for finding as to who could join as partners, and (at page 116 of 117 ITR)" * When a person in his capacity of karta of a Hindu undivided family enters into a partnership with others, the karta in his personal capacity alone is the partner. The firm can treat the karta and not the other members of the Hindu undivided family as its partner. "To reconcile, however, with the view expressed in Dhanwatey's case in our view, that will alone promote the interest of justice and create a balance between the interest of the Hindu undivided family on the one hand and the interest of the Revenue on the other, the view expressed by the Patna High Court, which has been quoted by us above, is the correct law. The above, in our view, is the essence of the various pronouncements of the Supreme Court that unless it was established that salary/remuneration, etc., received by the partner, who represented a Hindu undivided family in the capacity of a karta, was not the income of the family and the remuneration was for services rendered by him and that there was no real and sufficient connection between the investment of the joint family assets and the remuneration paid to him, the remuneration received by the manager or the karta of an undivided family working as a partner could not be treated as an income of the family and as such not liable to income-tax in the hands of the Hindu undivided family The judgment in Atma Ram Budhia's case was appealed against---vide S. L. P. (Civil) No. 5745 of 1984. The Supreme Court dismissed the Revenue's special leave petition (see [1991] 187 ITR(St) 46)In Dwarkadas Rameshwar Goenha v. CIT a Bench of this court has reiterated the view that though when a karta of a Hindu undivided family enters into a partnership, it is in his personal capacity alone as the partner and any payment of interest to him is, therefore, clearly governed by section 40(b) In Venkatesh Emporium, v. CIT and T.M.N.M. Somasundara Nadar Sons v. CIT this court has taken notice of the circumstances in which the court pointed out that the proper way to look at the position of a karta or manager of a joint Hindu family is not to regard him as a representative, much less as an agent, of the family, but to regard him as its alter ego. The court has observed in Venkatesh Emporium's case that this position is one of sheer legal necessity, because while a Hindu undivided family is by no means a pure abstraction, its structure and its way of existence is such that it has to have some human activist to discharge the responsibilities and manage its affairs, even as an incorporated company must have a managing director for its meaningful existence. The court has observed that it is only in this way that the karta figures in all transactions concerning the joint family. The transactions themselves are the family's transactions, and none the less so, for the fact that they have, per force, got to be put through by some one like the karta. The court has observed that it is only in this way that the karta figures in all transactions concerning the joint family. The transactions themselves are the family's transactions, and none the less so, for the fact that they have, per force, got to be put through by some one like the karta. But, as the Supreme Court has pointed out, this concept of a joint Hindu family, being a unit by itself, may not fit in with the requirements of some branches of the law, such as the law of partnership, After taking notice of the status of a partnership, vis-a-vis, income-tax law, the court has observed" * As we earlier observed, section 40(b) only entitles the Income-tax Officer to add back payments of interest made by a firm to its partner. If the payment is made not to a partner but to the partner's joint family, the section cannot be invoked at all. "and concluded " It must, therefore, be held that except in a case where the Income-tax Officer is in a position to show that the interest payment by a firm is to a partner as such, section 40(b) cannot be invoked for disallowing the payment in the computation of the firm's chargeable income, and this would be the position even though the interest is paid to a family in which the partner is a karta and even though the tax treatment of the share income of that partner would be considered not in his individual assessment, but in the assessment of his joint family. "In T. M. N. M. Somasundara Nadar Sons' case this court has reiterated the above view of the law as expressed in Venkatesh Emporium's. We are thus supported in our view by the firm judicial approach of almost all the courts in the country and that of the Supreme Court that unless it was established that the remuneration received by the manager of a Hindu undivided family was not the income of the family and the remuneration was for services rendered by him and that there was no real and sufficient connection between the investment of the joint family assets and the remuneration paid to him, the remuneration received by the manager or karta of an undivided family working as a partner could not be treated as an income of the family and as such was not liable to income-tax. In other words, in the absence of any evidence that the interest, salary, remuneration agreed to be paid was not for services rendered to the firm but was a profit in lieu of the investment of the family funds in the business, the irresistible conclusion will be that the salary/remuneration paid to an individual member of the family was not the income of the family ; but was in consideration of the contract of service and by way of compensation for services rendered by himIn the instant case, however, the position is altered by the facts, inter alia, that the capital contribution to the firm by Shri Kotian was not by or on behalf of the Hindu undivided family in the capacity of the karta. Kotian transferred his interest in the assets to his Hindu undivided family of which he was the karta on April 1, 1974, vide declaration dated March 29, 1975. The reconstituted partnership dated July 1, 1976, only inducted other partners, who entered the partnership in their individual capacity. It was thus Kotian's separate property upon which he was included as a partner in the firm and which formed the capital investment by him in his individual capacity. The reconstituted partnership dated July 1, 1976, only inducted other partners, who entered the partnership in their individual capacity. It was thus Kotian's separate property upon which he was included as a partner in the firm and which formed the capital investment by him in his individual capacity. Section 64(2) of the Act provides as follows" * Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of the property belonging to the family or throwing it into the common stock of the family (such property being hereinafter referred to as the 'converted property'), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day Of April, 1971, --- (a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly ; (b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family ;(c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse or minor child on partition shall be deemed to arise to the spouse or minor child from assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse or minor child of the individual Explanation.--- For the purposes of sub-section (2), --- ' property' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale thereof and where the property is converted into any other property by any method, such other property." Even if no fault is found in Shri Kotian's converting his share capital in the firm into the property belonging to the family through the act of impressing the same with the character of the property belonging to the family or throwing it into the common stock of the family on April 1, 1974, the income derived from the same or any part thereof, would be deemed to arise to him and not to the family. While we consider it natural for a Hindu undivided family to act through its karta and invest through him in the business including partnership with others and represent the family in the firm and stated accordingly that unless it was established that the remuneration received by the manager of a Hindu undivided family was not the income of the family and the remuneration was for the services rendered by him and that there was no real and sufficient connection between the investment of the joint family assets and the remuneration paid to him, the remuneration received by the manager or karta of an undivided family working as a partner could not be treated as an income of the family and, as such, was not liable to income-tax, we reaffirm that individuals who do business in their individual capacity and make income as partners in a firm by such receipts as are indicated in section 40(b) of the Act, i.e., interest, salary, bonus, commission or remuneration, have recourse to means so that they may escape tax. It will be necessary in every case to scrutinise the facts to hold whether the income goes to the Hindu undivided family or it goes to the individual, who is the partner in a firm. In such cases, however, as the one in hand, it is enough if it is found that the investment and capital belonged to the individual, who was a partner at the relevant time and who had converted such individual property into the property belonging to the family or thrown it into the common stock of the family. Income from such property would be deemed to arise to him and not to the familyThe Tribunal has made no mistake and has reached the correct conclusion. The reference is answered accordingly. No costs.