TMI Blog1999 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... eds to be resolved by this court. For appreciating the question involved in these cases, it will suffice to refer to the facts in Civil Appeal No. 4234 of 1983, which pertains to the assessment year 1973-74. The respondent was a partner in the partnership firm, Rockman Cycle Industries, Ludhiana, in his capacity as karta of the Hindu undivided family. Two minor children of the respondent, a daughter, Miss Neeru, and a son, Pankaj, were admitted to the benefits of the partnership. Similarly, they were also partners in another partnership firm, Munjal Gases, Ludhiana. The income arising in the hands of the minor children was sought to be included in his total income. That was objected to by him on the ground that he was a partner in the firms in the capacity of karta of the Hindu undivided family, so section 64 of the Income-tax Act, did not apply. The Income-tax Officer rejected that contention, included the share income of the minors in his total income and assessed him accordingly. The Appellate Assistant Commissioner upheld the order of the assessing authority, in appeal. On further appeal, the Income-tax Appellate Tribunal, Amritsar, set aside the order of the appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm carrying on a business in which such individual is a partner; (ii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner... Explanation .---For the purpose of clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater; and where any such income is once included in the total income of either spouse or parent, any such income arising in any succeeding year shall not be included in the total income of the other spouse or parent unless the Income-tax Officer is satisfied after giving that spouse or parent an opportunity of being heard, that it is necessary so to do." This provision occurs in Chapter V of the Act which deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith his wife and/or minor children. It may be noticed here that in that case the appellant did not base his challenge to the said provision as a karta of the Hindu undivided family. The import of the expression "any individual" in section 16(3)(a) of the 1922 Act fell for consideration of this court in CIT v. Sodra Devi [1957] 32 ITR 615. There Sodra Devi and her major children formed a partnership firm to which her minor children were admitted to the benefits of the partnership. Under the said provision, the share income of the minor children in the partnership was sought to be added in the income of Sodra Devi. It was contended that the expression "any individual" did not include "the female" so the said income of the minor children was not includible in the total income of their mother. By a majority, that contention was accepted holding the words "any individual" and "such individual" occurring in section 16(3) are restricted in their connotation to mean only the male but not the female of the species. The said provision of the 1922 Act is embodied in section 64(1) of the 1961 Act with the changes that the word "wife" is replaced by the word "spouse" in clause (i) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahu Govind Prasad v. CIT [1983] 144 ITR 851 approving Madho Prasad v. CIT [1978] 112 ITR 492 (All) and the High Court of Madras in CIT v. S. Balasubramaniam [1984] 147 ITR 732 and in CIT v. Shri Manakram [1990] 183 ITR 382 (MP) took the view that the term is used in the said provision in the wider sense. But a contrary view is taken by the High Court of Andhra Pradesh in CIT v. Sanka Sankaraiah [1978] 113 ITR 313, the Gujarat High Court in Dinubhai Ishvarlal Patel v. K. D. Dixit [1979] 118 ITR 122, the Punjab and Haryana High Court in CIT v. Anand Sarup [1980] 121 ITR 873, the Delhi High Court in Prayag Dass Rajgarhia v. CIT [1982] 138 ITR 291 and the Full Bench of the Karnataka High Court in C. Arunachalam v. CIT [1985] 151 ITR 172. Here, it is necessary to bear in mind the distinction between the rights and obligations of partners of the partnership firm and coparceners of the Hindu undivided family. In CIT v. Bagyalakshmi and Co. [1965] 55 ITR 660, this court observed : "A partnership is a creature of contract. Under Hindu law a joint family is one of status and right to partition is one of its incidents...... Except where there is a specific provision of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily which consists of a karta, his sons, their wives and minor grand children, if along with the karta the spouse of a son and their minor children are admitted to the benefits of the partnership or are partners of the partnership firm, obviously, their share income from the firm could not be added in computing the total income of the karta as in such a case section 64(1) will not be attracted. But if the karta's spouse and minor children are admitted to the benefits of the partnership or are joined as partners of the partnership firm, their share income from the firm will have to be added up in the income of the karta. Obviously, the expression cannot be so interpreted to yield such inequitable and inconsistent result which could not have been contemplated by Parliament. It will be pertinent to note here that under section 4 of the 1961 Act, the charging section, the total income of the previous year or years of every person is charged for any assessment year at the rate or rates prescribed by the Finance Act. We may notice here the definition of the term "person" which is defined in section 2(31) of the 1961 Act, and reads as under : "2. (31) 'person' includes--- (i) an ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fold of section either by defining individual or otherwise. On the ground that the karta of a Hindu undivided family will draw an unfair advantage of this interpretation, we cannot enlarge the meaning of the term "individual" by the process of interpretation so as to rope in karta within the meaning of the term "individual" and by implication, the Hindu undivided family within the clutches of section 64(1) of the 1961 Act. From the above discussion, it follows that income in the hands of the karta of the Hindu undivided family as partner of a partnership firm cannot be treated as income of individual and, if that be so, the income arising to the spouse or minor child of the karta of the Hindu undivided family cannot be included in his income as such under section 64(1)(i) and (ii) of the 1961 Act. For the above reasons, we are inclined to take the view that the expressions "any individual" and "such individual" in section 64(1)(i) and (ii) are employed in a restricted sense and do not include a karta of a Hindu undivided family. Accordingly, we approve the judgments of the High Courts of Andhra Pradesh, Gujarat, Punjab and Haryana, Delhi, Kerala, Rajasthan and Karnataka and ov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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