COMMISSIONER OF INCOME TAX Vs. BALASUBRAMANIAM S

JUDGEMENT

(1.) HAVING six daughters in a Hindu family is no, especially when they are born in quick succession. The assessee, in this case, is the karta of a HUF. He sired six daughters in a row, Radha, Seetha, Geetha, Latha, Sudha and Preetha. During a particular span of time with which we are concerned in this reference, all these girls were minors and this gives an indication of the intervals of their arrivals. The assessee had a plurality of business interests. He was, inter alia, a partner in two firms carrying on film distribution business. He had also a plurality of income-tax assessments, one assessment in his own name as an individual and another assessment in the name of his HUF. In this state of affairs, he got all his six minor daughters admitted to the benefits of partnership, one after the other in the two firms in which he was a partner. We would not know that prompted this decision, whether it was a pure business decision, or part of a family arrangement, or a downright taxsaving device. We can only go by the results; or rather, but the way the results were put to argument before us. For, the admission of one's minor daughter to the benefits of partnership in a firm in which one is a partner if fraught with tax consequences. The assessee must have known that he was playing with s. 64(2)(ii) of the I.T. Act, 1961, not by having six minor daughters, but by getting them admitted in his partnership firms. What apparently emboldened the assessee must have been the phenomenon of his having a HUF as a separate subject of charge. If we may be permitted an aside, this ancient institution of Hindu genius, the undivided family, had its work cut out, nowadays as an elementary tax avoidance device described euphemistically as a tax shelter. Voltaire said that if there were no God, it would be useful to invent one. The vast community of Hindu taxpayers must frankly admit that if there were no such thing as a HUF, it would be useful to invent one, at least for tax purposes. Be that as it may, the assessee in this case was already having the tax blessings of being the karta of his undivided family, in that his partnership interests in the two firms were all the while attributed to his undivided family. In consequence, it was in the family's assessment, and not in his individual assessment, that his share income was being included and brought to tax. It must have been this assessment pattern which apparently tempted the assessee into admitting all his six minor daughters in his two firms. He had nothing to fear from one quarter at least. There was no question of the minor's share income being clubbed with his own share income and carried into the assessment of the undivided family. This is because the dreaded s. 64(1)(ii) does not deal with assessment of HUFs. Its only concern is with taxpayers chargeable to tax in the status of "individuals". The section, as it stood at the material time was as follows :

(2.) ONE would have thought that on the plain terms of this provision the share income of all the minor daughters of the assessee must stand included in the total income of the assessee as an individual. All that the section requires in express terms is that the minor children and their parent must both have their membership in the same firm, the one by virtue of admission to the benefits of partnership and the other by virtue of being a full fledged partner. In this case, this requirement is fulfilled in both the firms. The ITO accordingly applied the section and included the minors' share income as part of the assessee's total income in his individual assessment.

(3.) THE submission of Mr. Jayaraman for the Revenue is that the Tribunal's decision is based on a misconstruction of s. 64(1)(ii). He said that on the express terms of the section we cannot accept the Tribunal's view that the father's income from the firm must find a place in his total income in order that his minor child's share income can be included in that total income.