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TMI Blog1978 (2) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... oizuddin who was the proprietor of the firm, Messrs. Kharkhana Zinda Tilismath. He died intestate in February, 1954, leaving behind his mother, two wives (the assessees) and sons and daughters, some of whom were minors born to both the wives. The deceased was governed by the Muslim Sunni Hanafi law. All his legal heirs including the assessees and the minor sons succeeded to the matruka of the deceased in definite shares according to their personal law. On May 4, 1954, for the purpose of carrying on the business of the firm belonging to the deceased Hakim Mohammed Moizuddin, all the heirs entered into a partnership. Among the partners were the two assessees and the minor children of each of the assessees. In all, there were five minors who w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the assessing authority. On appeal to the Tribunal, the Tribunal confirmed the order of the AAC. Hence, at the instance of the assessee, the following two questions have been referred for this court's opinion: " (1) Whether, on the facts and in the circumstances of the case, the ITO was correct in including in the total income of the assessee under s. 64(ii) of the I.T. Act, 1961, the share income arising to the assessee's minor children by reason of their admission to the benefits of partnership ? (2) Whether, on the facts and in the circumstances of the case, the AAC was justified in upholding the inclusion in the total income of the assessee under s. 64(ii) of the I.T. Act, 1961, of the share incomes arising to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lu is that, because of the personal law governing the minors, the matruka devolved upon them and that property consisted in the shares of the minors in the firm, and, as such, the assessments on the assessees should have been made in their capacity as representative assessees under s. 161 of the Act. To appreciate the contention of the learned counsel for the assessees, it may be necessary to refer to the two relevant provisions, ss. 64(ii) and 161 of the Act. Section 64(ii), as it to stood prior to the Amendment Act, 1975 (which came into force with effect from April 1, 1976), reads : " 64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly- ...... (ii) to a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be made upon him in his representative capacity only; in other words, that income received by him as a representative assessee is not includible in his own income. Section 161 speaks of liability of a representative assessee in respect of the income which he receives in his individual capacity. Section 161 is silent regarding the liability of a representative assessee in respect of income of a minor child of an individual who has been admitted to the benefits of partnership in a firm in which such individual is a partner. In other words, s. 64(ii) and s. 161 operate in two different fields. Section 64 is a special provision which governs the income of a minor child of an individual who has been admitted to the benefits of partnership i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. The intention of the legislature in enacting s. 64, as pointed out by Subba Rao J. (as he then was) in Balaji v. ITO [1961] 43 ITR 393 (SC), was to prevent evasion of tax by an individual by nominally entering into partnership with his wife or minor children. The scope of s. 64 is limited only to a few of the intimate members of a family who ordinarily are under the protection of the assessee and are dependants of him. The wife and minor children cannot also be ordinarily expected to carry on their business independently with their own funds, when the husband or the father is alive and when they are under his protection. The mode of taxation may be a little hard on a husband or a father in the case of genuine partnership with wife or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership should be included in her income. The Supreme Court again endorsed its view in Muthiah Chettiar v. CIT [1969] 74 ITR 183. The Madras High Court in CIT v. Smt. Shajathi alias Jainabi [1977] 110 ITR 738, on somewhat similar facts, opined that, if the minors were admitted to the benefits of partnership, then it would be proper to assess the income referable to the minors in the hands of the firm and also to club the income with that of the widow. We, therefore, hold that, when once it is admitted that the minors were admitted to the benefits of partnership, there is no escape from the operation of the provisions of s. 64(ii) of the Act. We, therefore, answer the questions referred to us in the affirmative and against the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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