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High Court Of Allahabad
Satish Chandra, C.J., R.M. Sahai, J.
Addl. Commissioner Of Income-Tax – Appellant
Versus
Yashwant Lal – Respondent
Income-tax Reference 61 of 1975
Decided On : Apr 24,1978
R.M. Sahai, J.
1. THE following question of law has been referred for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the share income of the two minor sons and one minor daughter of the assessee, an individual, from the partnership firm to the benefits of which they are admitted and in which the assessee is a partner as karta of his Hindu undivided family and not in his individual capacity, can be included in the income of the assessee under Section 64(ii) of the Income-tax Act, 1961 ?"
2. THE question referred to us stands squarely answered by the decision reported in Madho Prasad v. CIT [1978] 112 ITR 492 (All).'
Shri Ajit Dhawan, learned counsel for the assessee, however, contended on the basis of Section 64(ii) that the assessee was not an individual, as he was a partner in the firm in the capacity of karta. He being not an individual, as contemplated in Section 64(ii), the income could not be clubbed along with the income of the minor sons and daughter.
3. THIS very argument was raised in the case of Madho Prasad v. CIT [1978] 112 ITR 492 (All) and the Division Bench, after applying the principles laid down in two Supreme Court decisions, Firm Bhagat Ram Mohanlal v. CEPT [1956] 29 ITR 521 and CIT v. Bagyalakshmi and Co. [1965] 55 ITR 660, came to the conclusion that the karta who is a partner is an individual within the meaning of Section 64(ii), and as such the income of the minor sons and daughter admitted to the benefits of the partnership shall be clubbed with the income of such individual.
4. FOLLOWING the decision in Madho Prasad v. CIT [1978] 112 ITR 492 (All), we answer the question referred to us in the affirmative, in favour of the department and against the assessee. The Commissioner will be entitled to costs, which are assessed at Rs. 200.
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