TMI Blog1977 (10) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... s. With effect from April 15, 1967, a partnership firm was constituted for the purpose of carrying on the same business with Sanka Sankaraiah as the karta and his wife as a partner. His two minor children were admitted to the benefits of the partnership, and a partnership deed was executed for that purpose. Sankaraiah also made a claim for recognition of the partial partition, which was accepted by the Income-tax Officer on March 31, 1970. An application for registration of the firm was also filed and it was granted registration. Sankaraiah, the karta, has his individual income and he has been assessed separately on that individual income. So far as the interest in the partnership is concerned, his share in the firm which has come into exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raiah in his individual capacity under section 64(1)(ii) and (iii) of the Act. The same method was adopted for the subsequent assessment year 1969-70 also by the Income-tax Officer and also for the assessment year with which we are concerned, viz., 1970-71. The assessee objected to the inclusion of the income realised by his wife and minor sons in his income before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner deleted the inclusion of the share income of the wife and minors in the individual assessment of Sankaraiah. That led to the revenue preferring an appeal before the Tribunal and the Tribunal confirmed the decision of the Appellate Assistant Commissioner. Hence, the following question was referred for our o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." From the admitted facts, it is manifest that Sankaraiah was a partner of the firm in his capacity as karta of the Hindu undivided family consisting of himself, his wife and his minor daughter. Sankaraiah was also assessed separately as an individual on his separate income. Even after the partial partition, the department recognised the existence of the Hindu undivided family of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of tax by transferring the assets to a spouse or minor child. Under this section, the husband's share of the profits of a firm, where husband and wife are both partners could be assessed in the wife's hands or vice versa, depending upon the fact whose total income is greater. The income of the minor child admitted to the benefits of the partnership is similarly to be included in the income of that parent whose total income is greater. In the instant case, the Hindu undivided family of which Sankaraiah was the karta was being assessed separately in respect of the share income from the partnership derived by him as partner of the firm. Sankaraiah's position as a partner in the partnership firm was that of karta of the Hindu undivided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld were also partners along with him. It is not the case of the revenue that Sankaraiah was a partner of that firm in his individual capacity. It is true that a contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership and it only regulates the rights and liabilities of the partners. A partner could be a trustee. A partner could be the karta of a Hindu joint family or he may under an agreement, express or implied, be the representative of a group of persons or even be a benamidar for another. As stated by the Supreme Court in Commissioner of Income-tax v. Bagyalakshmi Co. [1965] 55 ITR 660, in all such cases he occupies a dual position. Qua the partnership, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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