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TMI Blog1993 (9) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee a sum of Rs. 9,489, being the said lady's share in the income of the said firm. This he did invoking the provisions of section 64(1)(i) of the I.T. Act, 1961. 3. The said addition was one of the subject-matters of the appeal filed by the assessee before the CIT(A). The assessee's case before the first appellate authority was that the assessee was a partner in the said firm of M/s Kalyan Chakravarthy Theatre not in his individual capacity but in his representative capacity of the karta of a smaller HUF, and that therefore section 64(1)(ii) was not applicable. In this regard, reliance was also placed on behalf of the assessee on the decision of the first appellate authority on this issue relating to the assessment year 1983-84, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the Department is now before us. 6. Shri L. Raghavan, the learned Departmental Representative, vehemently contended that the CIT(A) has misunderstood the true ratio of the Madras case of CIT v. S. Balasubramaniam [1984] 147 ITR 732. According to him, the said Madras decision supported the Department's case. In this regard, he also referred to and relied upon the Madhya Pradesh High Court decision in Smt. Rukmani Agrawal v. CIT [1988] 170 ITR 133. 7. On his part, Shri S. Sridhar, the learned counsel for the assessee, fairly drew our attention to the fact that the said issue came up for consideration in the assessee's assessment relating to the assessment years 1981-82 and 1982-83, and that the Tribunal decided the issue in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efits of partnership in a firm in which such individual is a partner." Invoking the said provisions, the Assessing Officer included the minors' share income as part of the assessee's total income in his individual assessment. In this regard, the Assessing Officer negatived the assessee's contention that because the assessee was a partner in the said two firms in his "representative" capacity as the karta of the HUF, section 64(1)(ii) which is applicable only to the cases of individuals, did not apply to his case. The assessee was, however, successful before the ITAT. 12. Thereupon, at the instance of the Department, the following question of law was referred to the High Court for their esteemed opinion: "Whether, on the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional High Court observed that the construction placed by the said High Courts on section 64(1)(ii) would only benefit taxpayers whose personal law is governed by Hindu Law and, even amongst this class of taxpayers, it would help only those who can afford to have their partnership share income taxed in their joint family hands. The said construction will not help other taxpayers similarly circumstanced whose personal law is not Hindu Law. 14. The true ratio of the said Madras case is that in cases where both the parent and the minor children derive income from a partnership, the minor's share should get assessed in the individual hands of the parent. This is so, even if the parent happened to represent the HUF in the firm. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch individual is a partner' occurring at the end of the two clauses of section 64 mean? Does it cover a karta if he is a partner as such, or is it restricted to one who is a partner in his own right, i.e., purely in his personal capacity ? A human being can be a spouse and parent. He can at the same time be the guardian of the minor children or the karta of his HUF, etc. He can be all or any of these: and, in addition, be a partner in a firm in which his spouse or minor children are also partners. Take the case of a karta of an HUF. He may as such be a partner in a firm. As karta he represents the members of the family. But, 'it is well-settled that when the karta of a joint Hindu family enters into a partnership with strangers, the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir other relationships inter se are not relevant. The fact that he is also the karta, guardian or trustee or benamidar, etc., is immaterial." 17. In the case before, we are concerned with the assessment of the assessee in his individual capacity. He is a partner in M/s Kalyan Chakravarthy Theatre. So is his wife. Since he is a partner in the said firm in his representative capacity, the share of the income of the firm allocated to him has not been brought to tax in his hands in his individual assessment. In other words, his "representative capacity" has been recognised and given effect to and the matter rests there. When it comes to section 64(1)(i) [whose phraseology is identical with that of the old section 64(1)(ii) dealing with inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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