TMI Blog1994 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm while computing the income from property in the hands of the assessee partner for the assessment years 1970-71 and 1971-72 ? " The assessee, a Hindu undivided family, owned a property at No. 196 A, Govindappa Naicken Street, Madras-1. The ground floor of that property was let out to the firm, in which, the assessee was a partner, through its karta. No rent was charged against the firm for its occupying the premises. The assessee did not admit any income from the portion occupied, nor did the firm claim deduction towards expenses by way of rent. In the assessment of the Hindu undivided family, the Income-tax Officer held that since the firm was a different entity from the assessee-Hindu undivided family, the fair rent receivable sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 22, if it falls within its ambit, that the assessee-Hindu undivided family carries on business in the premises, of which it is the owner, through the firm, in which it is represented by the karta as partner, that the assessee-Hindu undivided family is also assessed on the share income from the firm, that the mere fact that the assessee-Hindu undivided family as such is not a partner in the firm but only the karta represents the assessee as partner, will not disentitle the assessee to the benefit under section 22 of the Act, as the Hindu undivided family in effect occupies for the purpose of its business the portion of the premises in question. In that view of the matter, the Tribunal held that the notional rent receivable as esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family and since the joint family is the owner of the property, which is occupied by the firm the benefit under section 22 of the Act is available to the assessee. We have heard the rival submissions. The fact remains that the assessee is a Hindu undivided family, owning the property. The ground floor is let out to the firm, in which the assessee was a partner through its karta. There was no rent charged against the firm for its occupying the portion of the property and the assessee did not admit any income from the portion occupied by it, nor did the firm claim deduction towards expenses by way of rent. The share income from the firm was assessed in the hands of the assessee-Hindu undivided family. The point for consi deration is, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the karta of the Hindu undivided family could not be included in the total income of the assessee and section 16(3)(a)(ii) of the 1922 Act did not apply. Section 64(1)(ii) of the 1961 Act, prior to its amendment with effect from April 1, 1976, was in pari materia with section 16(3)(a)(ii) of the 1922 Act and there was no good and compelling reason to depart from the view taken therein. " Therefore, it remains to be seen whether a karta of a Hindu undivided family can be a partner in a firm either in his individual capacity or, in his capacity as karta representing the Hindu undivided family. On facts, the authorities below came to the conclusion that the karta is representing the Hindu undivided family. The property in question is owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partnership as a joint family asset, but they cannot claim to exercise the rights of partners nor be liable as partners. " This decision in a way supports the contention put forward by learned counsel appearing for the assessee that qua the Hindu undivided family, the income derived by the karta of the Hindu undivided family from the partnership firm is the income derived from the business run by the Hindu undivided family. Learned standing counsel also placed reliance on a decision of the Allahabad High Court in CIT v. Shiv Mohan Lal [1993] 202 ITR 60. According to the facts arising in that case, the Hindu undivided family was the owner of the house property. The business, which was being carried on in the property was not owned by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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