1994 (9) TMI 4 - SC - Income Tax

Karta was partner in firm - Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the income earned by Sureshkumar Jayantilal and Ashok Kumar Jayantilal from the partnership of Messrs. A.J. and Co. cannot be included in the income of the assessee

Summary

Issues:
1. Inclusion of income earned by minors from a partnership in the income of a Hindu undivided family.
2. Validity of the partnership involving minors and the Hindu undivided family.

Analysis:
1. The first set of appeals involved the question of whether the income earned by minors, Sureshkumar Jayantilal and Ashok Kumar Jayantilal, from the partnership of Messrs. A.J. and Co. should be included in the income of the assessee, a Hindu undivided family. The firm was reconstituted to include the minors as partners, resulting in a reduction of the karta's share. The Income-tax Officer initially included the minors' shares in the family's income, but the Tribunal found that the family had agreed to a smaller share in the firm, and there was no evidence to suggest the minors were benamidars of the family. The High Court also ruled in favor of the assessees, stating that minors could not represent the family in a partnership. Therefore, the income earned by the minors was not to be added to the family's income.

2. The High Court referred to a previous judgment regarding a partnership involving the karta of a Hindu undivided family and adult coparceners, emphasizing that minors cannot represent the family in a partnership. The Tribunal's finding that the minors were not benamidars of the family was crucial, as it established that the minors represented only themselves in the partnership and were entitled to their shares as their own income. The judgment cited a case unrelated to the issue at hand, emphasizing the distinction in partnership structures involving minors and adult coparceners. Ultimately, the appeals were dismissed, and no costs were awarded.