Commissioner of Income Tax vs K.T.S. Nagamanickam Chettiar (Decd.). (By LRs. N. Venkataraman)

K.A. Swami, C.J.—The Income Tax Appellate Tribunal has referred the following question u/s 256(1) of the Income Tax Act, 1961.

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal''s view that the entire income from the business in Petroleum

Products cannot be assessed as the income of the assessee family; but only the share income of the assessee should be assessed in the hands of the

assessee is sustainable in law ?

The aforesaid question came to be referred on the basis that the partnership firm formed by the Karta of the Hindu undivided family and the

coparceners of that family could not legally from a partnership and the partnership formed by them was not valid. Therefore, the income was to be

assessed in the hands of the family. The proceedings relate to the assessment years 1974-75 and 1975-76. It is relevant to notice that, in respect

of the very partnership, this court had an occasion to consider in Commissioner of Income Tax, Tamil Nadu-II Vs. K.T.S. Nagamanickam

Chettiar, , the following question referred to it by the Income Tax Appellate Tribunal u/s 256(1) of the Act (At page 116) :

Whether, on the facts and in the circumstances of the case, the assessee-firm consisting of the karta of the Hindu undivided family as one of the

partners and four other coparceners of the said Hindu undivided family as other partners and they having brought in their separate property was a

validly constituted firm and was entitled to registration ?

This court has answered the question in favour of the assessee and against the Revenue. That being so, the partnership constituted and

registered by the members of the joint family was a valid partnership. That being so, the Tribunal has correctly held that it is only the share of the

income of the assessee in the partnership which should be taken into account for the purpose of determining the taxable income. Accordingly, the

question is answered in favour of the assessee and against the Revenue. No costs.