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Issues:
1. Inclusion of share income from a partnership firm in the total income of a partner when the partner has not received the share income. Analysis: The judgment pertains to a reference under section 236(1) of the Income-tax Act, 1961, for the assessment years 1980-81 and 1981-82. The main issue was whether the Tribunal was justified in upholding the action of the Income Tax Officer (ITO) in including the share income from a partnership firm in the total income of the assessee when the assessee had not received the share income from the firm. The assessee, a partner in a registered firm, had his share of income added to his total income by the ITO for both assessment years. The assessee contended that the income from the partnership firm and the extent of his share were subject to litigation, and he had not received any share from the firm. The Appellate Authority directed the ITO not to include the income from the partnership firm in the assessee's total income, pending the decision of the High Court. However, the Tribunal overturned the Appellate Authority's decision and upheld the ITO's inclusion of the share income in the assessee's total income. The Tribunal's decision was challenged on the grounds that it did not consider the facts and circumstances of the case adequately. The counsel for the assessee argued that the suit for dissolution of the partnership firm precluded any assessment of the firm or allocation of income to the assessee. However, the Court held that in the absence of any challenge to the Tribunal's findings, they were bound by those facts. The Court emphasized that as per section 182(1) of the Act, the share of each partner in the income of the firm must be included in the total income of the partner and assessed to tax. Therefore, irrespective of the accounting system followed by the assessee, the income from the partnership firm was deemed includible in the assessee's total income. In conclusion, the Court answered the reference question affirmatively in favor of the revenue and against the assessee. The judgment highlighted the statutory requirement under section 182(1) for including a partner's share income from a firm in the partner's total income, regardless of the actual receipt of such income. The decision underscored the legal obligation to assess and tax the partner's share of profit from a partnership firm as per the provisions of the Income-tax Act, 1961.
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