TMI Blog1985 (10) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share income of the assessee's wife and minor children could not be included in the assessee's hands on the ground that the residential status of the individual alone has to be considered and not of his wife and children for the purpose of section 64(1) of the Income-tax Act, 1961 ? " The assessee, F. Y. Khambaty, was a partner in the firm of M/s. F. Y. Khambaty Sons, Kano, Nigeria (referred to hereinafter as " the said firm "). Among the other partners in the said firm were his wife and two minor sons in the assessment year 1967-68 and one minor son in the other three assessment years. The assessee's two major d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in the total income of the assessee for the purpose of taxation. On appeals filed by the assessee, the Appellate Assistant Commissioner took the view that section 64 and section 5 of the said Act have to be read harmoniously and in that case, the interest income and the share of profit earned by the wife and minor sons as set out earlier could not be included in the total income of the assessee for the purpose of taxation. The Revenue preferred appeals to the Income-tax Appellate Tribunal. The Tribunal upheld the views taken by the Appellate Assistant Commissioner in favour of the assessee. It is from this decision of the Tribunal that the aforesaid question has been referred to us. We may point out that it is common ground that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5 sets out the scope of total income. The provisions of section 5 read as follows: " 5. (1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share of income in the said firm and the interest earned by them as set out earlier was liable to be included in the total income of the assessee. It was submitted by him that the provisions of section 5 of the said Act have to be read subject to the provisions of section 64 because of the expression " subject to " occurring in the opening part of sub-sections (1) and (2) of section 5. It was contended by him that although the assessee might not have been liable to pay any tax on his share of income in the said firm which was carrying on business in Nigeria and not controlled from India, the income earned by his wife and minor sons from the said firm was liable to be included in his total income which was taxable in India. We find it diffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho are not resident in India from a partnership business carried on abroad and not controlled from India in which the assessee is a partner would be liable to be included in the total income of the assessee and liable to be taxed in India. We find it difficult to believe that the Legislature had any such intention in mind in enacting the provisions of section 5 and section 64. Accepting the submission of Mr. Jetley, in our view, would amount to straining the plain language of section 5 to bring about an illogical and unjust result and there is no warrant for us to do so. It was submitted by Mr. Jetley that if we interpret the provisions of section 5, as we have done above, the result would be that even if an assessee is ordinarily resident ..... X X X X Extracts X X X X X X X X Extracts X X X X
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