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Interpretation of the term "individual" in the Proviso to Section 55 of the Income Tax Act. Analysis: The case involved a reference under Section 66(3) by the Income Tax Commissioner regarding the liability of a joint Hindu family to pay super-tax on profits received from unregistered firms. The registered firm, consisting of two joint families as partners, was held not to be a partner in nine unregistered firms, making each joint family individually liable for super-tax on their share of profits. The key question was whether the term "individual" in the Proviso to Section 55 includes a Hindu family for the purpose of super-tax liability. The Proviso to Section 55 states that super-tax shall not be payable by an individual having a share in an unregistered firm in respect of the profits and gains proportionate to his share. The department argued that the term "individual" should be narrowly interpreted to exclude Hindu families, as they are separately mentioned in the main section. However, the court opined that the term "individual" in the Proviso should be construed more broadly than in the main section to encompass a group of persons forming a unit, including a Hindu family. The court examined the legislative intent behind the provision and concluded that the Proviso aims to prevent double taxation on profits already taxed at the firm level. It was noted that while an individual is liable for super-tax on income exceeding a certain threshold, a higher exemption limit is set for Hindu families due to income sharing among co-parceners. Therefore, the court held that the term "individual" in the Proviso includes a Hindu family, despite the drafting challenges. In light of the above analysis, the court answered the reference question in the negative, ruling that a Hindu family is not liable to pay super-tax on profits received from unregistered firms as part of a registered firm. The costs of the reference were to be borne by the department, and the advocate's fee was assessed at Rs. 150. Overall, the judgment clarified the interpretation of the term "individual" in the context of super-tax liability for profits from unregistered firms, ensuring fair treatment for Hindu families under the Income Tax Act.
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