( 1 ) THE questions referred in these I. T,r. Cs. relate to the scope of Section 64 (1) (i) and (ii) of the I. T. Act, 1961 (called shortly the Act ). I. T. R. Cs. Nos. 89 and 90 of 1976 are at the instance of the assessee. I. T. R. C, no. 85 of 1978 is at the instance of the revenue.

( 2 ) THE facts, in brief, are these : i. T. R. Cs. Nos. 89 and 90/1976 : sri C. Arunachalam - the assessee was a partner in the firm of M/s Sunrise industries Syndicate representing his huf. His wife was also a partner in that firm. Sri C. Arunachalam was also a partner in that capacity in another firm called M/s. Sunrise Industries. There his minor children had been admitted to the benefits of tha partnership. For the assessment year 1971-72, Sri C. Arunachalam as an individual filed his return of income made of property income and refund of annuity deposit. The I. T. O. completed the assessment determining the assessee's total income at Rs. 12,368/- made up of property income of Rs. 10,643/- and refund of annuity deposit (other sources) of Rs. 1. 725/- in the status of an individual. For the assessment year 1972-73. I. T. O. made similar assessment accepting the return of the assessee. In both the said assessments, the share income accruing to the wife and children in the said firms was not brought to tax in the assessee's hands. I. T. R. C. No. 85/1978; sri K. Anantha Shenoy - the assessee herein was a partner representing his HUF in the firm of M/s Gajanana Cloth Stores (Wholesale), His three minor children were also admitted in that firm to the benefits of the partnership. The assessee as an individual fited his return of income being the remuneration received from the firm of M/s. Gajanana Cloth Stores. The i. T. O. accepted the same and completed the assessment in the status of an individual,

( 3 ) THE Commissioner of Income-tax in the exercise of his powers under Section 263, revised the assessments in all the above cases and directed that the share income of the wife and minor sons of the assessee should be clubbed with the individual income of the assessee.

( 4 ) IN the appeals against the orders of the Commissioner, the Tribunal took contradictory views. In the appeals preferred by Sri C. Arunachalam, the Tribunal concurred with the view taken by the Commissioner. But in the appeal preferred by sri A. Anantha Shenoy, the Tribunal reversed the order of the Commissioner by foliowing the decision dated June 7, 1975 of the the Delhi Bench of the Appellate Tribunal in the case of Kanhayalal rajagarhia. The Tribunal held that section 64 (1) (ii) has no application to the case since Sri Anantha Shenoy was a partner in the firm representing his HUF.

( 5 ) THE question for consideration is, when the Kartha of a HUF is a partner in a firm along with his wife, whether the wife's share income from the firm could be assessed in the hands of her husband in his individual capacity. Another question for consideration is, when the Kartha of a huf is a partner in a firm and when the kartha's minor children have been admitted to the benefits of that partnership, whether the minor's share income from the firm could be brought to tax in the hands of the father in his individual status. The answer to each question turns on the exact connotation of the words "any individual'' and "such individual" occurring in Section 64 (1) (i) and (ii) of the act.

( 6 ) THE original Section 64 of the Act was fre-numbered as Section 64 (1) by taxation Laws Amendment) Act, 1970. By Taxation Laws (Amendment) Act, 1975, sub-section (1) of Section 64 was replaced by a new sub-section (1), but we are concerned only with Section 64 (1) as it stood prior to its amendment by the Taxation Laws (Amendment) Act, 1975 (which came into force from April 1. 1975) since the present references pertain to the assessment years prior to 1976. The relevant portion of that section is as follows :"section 64 (1) : In computing the total income of any individual, there shall be included all such i

Click Here to Read the rest of this document