COMMISSIONER OF INCOME TAX Vs. SRINIVAS AND CO

JUDGEMENT

(1.) UNDER s. 256(1) of the IT Act, 1961, at the instance of the Department the Tribunal referred the following question for the opinion of this Court :

(2.) 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 Sons - Rs. 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 assessee-partnership firm amounting to Rs. 29,260, the ITO applied the rate of taxes applicable to the total income of Rs. 46,870, comprising not only the share income from the assessee-firm, but also the share income from the other two firms and the individual income from other sources. Aggrieved, the assessee filed an appeal before the AAC contending that the ITO was not justified in including in the assessment for the purpose of calculating the rate of tax on the share income of the non-resident partner from the assessee-firm, the other incomes of the non-resident partner, such as the share income of the other two firms and his individual income. But, however, the AAC confirmed the order passed by the ITO in applying the rate of tax applicable to the total income of Rs. 46,870. Aggrieved, the assessee filed a second appeal before the Tribunal. THE Tribunal, while reversing the orders passed by the authorities below, held that while levying tax on the share income of the non-resident partner in the assessee-firm, the rate of tax applicable would be the rate which is applicable to the share income of the non-resident partner in the assessee-firm. In other words, while applying the rate for levy of tax on the share income of the non-resident partner in the assessee-firm, the rate applicable to the total income including other income if any of the non-resident partner should not be applied.