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TMI Blog1989 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the assessee had not disclosed the share income of his wife from the partnership business in which the assessee was a partner representing the Hindu undivided family and the assessments were made including the share income of the wife in his individual assessments applying the provisions for aggregation under section 64(1) of the Income-tax Act. Those assessments for the years 1970-71 and 1972-73 were the subject-matter of our decision in I. T. R. Nos. 4 of 1983 and 366 of 1982, respectively, in which we held that the question whether the share income of the wife derived from the partnership business in which her husband also is a partner representing the Hindu undivided family should be included in the computation of the total income of the husband is a debatable question of law and, therefore, failure to disclose such income will not give jurisdiction to the Income-tax Officer to reopen the assessment under section 147(a) of the Act. We held therein that the reopening of the assessment was invalid, relying upon the decisions of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, ITO v. Madnani Engineering Works Ltd. [1979] 118 ITR 1, Gemin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the share income of the wife is to be included in the total income of the assessee in question on the facts and in the circumstances of the case will have to be considered and, therefore, the facts leading to the question in Income-tax Reference No. 310 of 1985 will have to be stated. The assessee-respondent is the managing director of a company called Toshiba Anand Batteries Ltd. Smt. Sheela Rani Anand, the wife of the assessee was a partner of Anand Water Metre Manufacturing Co., Jullundar. The assessee, representing his Hindu undivided family, was also partner of Anand Water Metre Manufacturing Co. For the assessment year 1973-74, the total income assessed in the original assessment which was completed on November 8, 1974, was Rs. 1,01,100. Subsequently, as a result of certain investigations conducted in connection with the assessee's wealth-tax assessment, it was found that the assessee had derived some capital gains and that income had not been admitted in the original return and assessed in the original assessment. Acting on this information, the Income-tax Officer reopened the assessment for the assessment year 1973-74 and while completing the assessment he also included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing assessed in his individual capacity and not one who is being assessed in his representative capacity such as karta of a Hindu undivided family. If the husband is only a partner representing a Hindu undivided family in the partnership, the income of the wife cannot be aggregated in the individual assessment of the husband. As against this, counsel for the Revenue submitted that the section does not make any distinction between the partner in a representative capacity and individual capacity. The only thing we have to look into, according to counsel, is whether the husband and the wife are partners in a firm and whether that firm is carrying on business. If these two conditions are satisfied, the other thing to be looked into is as to whose total income is greater for the purpose of identifying the partner for aggregation. We have carefully examined the rival contentions. There are a large number of decisions taking the views canvassed by both sides. The under-mentioned decisions support the contention of the assessee that the share income of the wife cannot be aggregated with the total income of her husband in his individual assessments, if the husband is a partner in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hai Parekh [1970] 77 ITR 27 (SC) and Col. H. H. Sir Harinder Singh v. CIT [1972] 83 ITR 416 (SC). Admittedly, in this case, the husband is only a partner in the firm representing the Hindu undivided family. Section 2(31) of the Act defines " person" so as to include a Hindu undivided family as an assessee under the Income-tax Act. Therefore, if the intention in providing section 64 was to club the share income of the wife from the partnership with the income of the husband in his individual assessment only because the husband is partner representing his Hindu undivided family, the word "individual" would not have been there in section 64. The Legislature advisedly did not use the word "person" which would include Hindu undivided family also in section 64(1) as well as in Explanation 1. In CIT v. Sanka Sankaraiah [1978] 113 ITR 313 (AP), referring to section 64(1), Obul Reddy C. J. held (at page 316) : "This section applies only to the computation of total income of an individual. The expression 'individual' does not comprehend in its meaning the 'karta' of a joint family. If it were the intention of the Legislature that the expression 'individual' used in section 64 should also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be assessed to tax in the hands of the karta, in his individual status. In arriving at the conclusion, we are adopting the reasoning of the Full Bench decision of the Karnataka High Court in Arunachalam's case [1985] 151 ITR 172 and the Bench decision of the High Court of Andhra Pradesh in Sanka Sankaraiah's case [1978] 113 ITR 313. Hence, on an anxious consideration of section 64 of the Income-tax Act as explained by the Supreme Court in CIT v. Sodra Devi [1957] 32 ITR 615, the objective behind the deeming section, the history and the mischief which the section intended to remedy in its historical setting and with due regard to the spirit and purpose of the section and at the same time bearing in mind the canons of interpretation of taxing law, we are of the view that section 64(1) of the Act can have application only where the individual is assessed as a partner of the firm in his individual capacity but not when he is a partner in a representative capacity as karta of a Hindu undivided family. In the light of the above discussion, we answer the only question surviving for the assessment year 1973-74 in Income-tax Reference No. 310 of 1985 in the negative, that is, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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