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Issues:
1. Application of section 64 in assessing income of minor sons of an assessee from a partnership firm. 2. Interpretation of the term "individual capacity" in the context of partnership firm income. 3. Relevance of Hindu undivided family status in determining tax liability. Analysis: 1. The case involved the application of section 64 of the Income-tax Act in assessing the income of minor sons of an assessee from a partnership firm where the assessee was also a partner representing his Hindu undivided family. The Income-tax Officer assessed the shares allotted to the minor sons as income of the assessee in his individual capacity, which was challenged on appeal. 2. The Appellate Assistant Commissioner held that section 64 applies only in the case of an individual and not when a person becomes a partner as the karta of a Hindu undivided family. The Tribunal affirmed this decision, leading to a question of law being referred regarding the inclusion of minor sons' income in the assessee's individual income. The Supreme Court's decision in CIT v. Shri Om Prakash clarified that section 64 does not apply to the share income of the karta from the partnership firm. 3. The court emphasized that a Hindu undivided family is an assessable entity, and the income earned by the karta is taxed in the hands of the Hindu undivided family. The share income of the karta from the partnership firm is not subject to tax again under section 64. The capacity in which a person is a partner, whether as an individual or as a karta, is relevant in determining tax liability within the family but does not affect the treatment of income for individual assessment purposes. 4. The court's interpretation highlighted that the income of the wife and minor children arising from their membership in the partnership firm should not be included in the income of the Hindu undivided family, as the karta receives income on behalf of the family. The decisions in various cases supported the view that section 64(1) is not attracted when the husband/father is a partner as the karta of the Hindu undivided family. Therefore, the income of the wife and minor children should not be included in the individual assessment of the karta. 5. Ultimately, the court ruled in favor of the assessee, stating that the income of the minor sons from the partnership firm, where the assessee was a partner representing his Hindu undivided family, was not liable to be included in the individual income of the assessee. The judgment clarified the distinction between income assessable in the hands of the Hindu undivided family and individual income, providing a comprehensive understanding of tax liability in such cases.
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