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TMI Blog1995 (8) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... resident partner, his share income alone should be considered and tax determined accordingly and his other income from any other source should not be included for the purpose of determining the rate of tax payable on such share income ? " The assessee is a partnership firm. The assessee-firm filed a return of income on behalf of Sri P. R. Srinivasan, partner, admitting a total income of Rs. 29,180. The said Srinivasan, who is a non-resident partner, besides having the share income of Rs. 29,260 in the assessee-firm, he also had share incomes from two other firms, P. L. Rangiah Chetty SonsRs. 7,013 and Vijaya Textiles--Rs. 9,140. He also had individual income from other sources of Rs. 1,450. While assessing the share income from the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tner should not be applied. Learned standing counsel appearing for the Department, submitted before us that the Tribunal was not correct in holding that the rate applicable to Rs. 29,260 alone should be applied in the case of the nonresident, who happens to be a partner in the assessee-firm, According to learned standing counsel, the words occurring in section 182(3) of the Income-tax Act, viz., "if it were assessed on him personally" would mean if it were assessed on him personally on his total income including other sources. Learned standing counsel further submitted that the decision reported in Gnanam and Sons v. CIT [1961] 43 ITR 485 (Mad) would not be applicable to the facts of this case because in that case, the High Court was conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax applicable in the case of a non-resident partner would be the rate that is applicable for the non-resident partner with regard to his total income derived from various other sources. According to learned counsel, the wording occurring in section 182(3) would mean that on the share income of a non-resident partner, the rate of tax applicable is the rate, which is applicable on the share income of the non-resident partner with regard to the share income he derived from the assessee-firm. Learned counsel further submitted that the decision reported in Gnanam and Sons v. CIT [1961] 43 ITR 485 (Mad) was affirmed by the Supreme Court in Rm. Ramanathan Chettiar v. CIT [1970] 78 ITR 10. Learned counsel further pointed out that the decision r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions. The fact remains that one P. R. Srinivasan is a partner in the assessee-firm. His share income from the assessee-firm came to Rs. 29,260. He was also a partner in the other two firms called P. L. Rangiah Chetty Sons, and Vijaya Textiles. He derived share income from the abovesaid two firms to the extent of Rs. 7,013 and Rs. 9,140, respectively. The said P. R. Srinivasan, is also having individual income from other sources amounting to Rs. 1,450. The point for consideration is what is the rate of tax applicable while levying tax on the share income of Rs. 29,260. Whether the rate of tax applicable to Rs. 29,260 should be applied or the rate of tax applicable to the total income of Rs. 46,870 should be applied. Section 182(3) of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. In fact, the non-resident partner of the assessee-firm is assessed separately on the share income derived from the firm, which is payable by the firm and on his other individual income he will be having a separate individual assessment wherein he will be assessed on the income derived from various other sources. Therefore, in the case of a non-resident partner, there are two assessments ; one on the share income derived from the partnership firm and another for his individual income from other sources, apart from the share income derived from the firm. It is, no doubt, true that the tax paid by the firm on behalf of the partner can be recouped by the partnership firm out of the share income due to the partner. Therefore, by paying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled for the determination of the total income of the non-resident partner. It was held that on the language of the proviso, there was no ground for computing the income of the non-resident partner with reference to section 4(1) of the Act and for excluding the income derived without the taxable territories by the operation of section 4(1)(c)". In the decision reported in Gnanam and Sons v. CIT [1961] 43 ITR 485 (Mad), it was clearly stated that the proviso does not call for the determination of the total income of the non-resident partner. It was further pointed out that it is only the share of the firm's income that is made liable for assessment and the sum so determined as payable, is made payable by the firm. It would mean that the sum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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