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TMI Blog1990 (7) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 1980-81 and Rs. 4,924 in the assessment year 1981-82. These four amounts were the interest amounts paid on investments. The firm sought deduction of the four amounts as they were paid to the Hindu undivided family of which Dindayal Jain is the karta. These four amounts were not paid to a partner of the firm. The Income-tax Officer rejected the claim. The Commissioner of Income-tax (Appeals) and the Appellate Tribunal allowed the, deductions. Thereafter, the following question is referred to be answered by this court for the four assessment years : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that where the assessee-partner is representing his Hindu undivided family in the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded family. This elucidation is sufficient now here ; the rest may have to be dealt with in Hindu law in a case relating to Mitakshara. Similar questions as in the instant case are often raised under two provisions of the Act, one is under clause (b) of section 40 and the other is a cognate question that arises under clause (1) of section 64 of the Act. To obviate the difficulties the Board on August 11, 1976, in Instruction No. 997 recounted the disputes under the former that arise intermittently and recited that amounts paid to individual partners received on behalf of the Hindu undivided family and received in the capacity of a partner have to be distinguished. The Board specified that if amounts are paid to Hindu undivided family in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income arises to the Hindu undivided family and by virtue of the provisions of the Income-tax Act itself, it is assessable in the hands of the Hindu undivided family. The Act recognises the concept of a person being a partner in firm in his individual capacity as well as a karta of a Hindu undivided family. It is aware of the provisions of the Indian Partnership Act, 1932. It has clearly provided that where the karta is a partner in a firm and it is found as a matter of fact that he is a partner representing the Hindu undivided family the income arising from such partnership shall belong to the Hindu undivided family and shall be assessed in the hands of the Hindu undivided family. The law being so clear and explicit in regard to the dual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanchand [1980] 126 ITR 654, the Gujarat High Court accepted the dual capacity and held that monies paid to the Hindu undivided family are to be deducted. The Bombay High Court in CIT v. Pannalal Hiralal and Co. [1984] 146 ITR 549 and the Madhya Pradesh High Court in a Full Bench case in CIT v. Narbharam Popatbhai and Sons [1987] 166 ITR 534, have held to the same effect. In Hindustan Steel Forgings v. CIT [1989] 179 ITR 280, the Punjab and Haryana High Court considered the three Explanations incorporated by the Taxation Laws (Amendment) Act in 1984 which came into force from April 1, 1985 and recorded a similar conclusion as in the case of the Madhya Pradesh High Court. The Gujarat High Court in the case cited earlier considered four And ..... X X X X Extracts X X X X X X X X Extracts X X X X
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