Addl. Commissioner of Income Tax vs Yashwant Lal

R.M. Sahai, J.—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 u/s 64(ii) of the Income Tax Act, 1961 ?"

The question referred to us stands squarely answered by the decision reported in Madho Prasad Vs. Commissioner of Income Tax, .''

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.

This very argument was raised in the case of Madho Prasad Vs. Commissioner of Income Tax, and the Division Bench, after applying the principles laid down in two Supreme Court decisions, Firm of Bhagat Ram Mohanlal Vs. The Commissioner of Excess Profits Tax, Madhya Pradesh, Nagpur and Another, and Commissioner of Income Tax, Madras Vs. Bagyalakshmi and Co., Udamalpet, , 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.

Following the decision in Madho Prasad Vs. Commissioner of Income Tax, , 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.