COMMISSIONER OF INCOME TAX Vs. V KRISHNAMURTHY

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following common question of law for the asst. yrs. 1974 -75 and 1975 -76 for the opinion of this Court under S. 256(1) of the IT Act :

(2.) THE assessee, V. Krishnamurthy, was a partner in T.K.S.V. Murugaiah Mudaliar and Bros., General Merchants, Vijayapuram, Tiruvarur and also in Sivan & Co., Vijayapuram in the capacity of Karta of the HUF consisting of himself and his wife. His two minor sons N. Swaminathan and K. Venkatesan were also partners in the firms. The minor sons were divided members and the division was accepted by the ITO under S. 171 of the IT Act. The ITO, Nagapattinam by his order dt. 9th June, 1980 made assessments on the assessee as individual under s.143(3) r/w S. 147(a) of the Act by clubbing the income of the minors for the said two years. The AAC on appeal deleted the inclusion, since the assessee was a partner in the firm only in the capacity as Karta of the HUF. Hence the minor's share income was not included. On appeal the Tribunal dismissed the Department's appeal. A similar question came up for consideration before the Supreme Court in the case of CIT vs. Om Prakash [(1996) 130 CTR (SC) 82 : 1995 (8) MTCR 308 : TC 42R.596] wherein the Supreme Court held that where a person is a partner in a partnership firm not in his individual capacity but as Karta of the HUF, neither the income accruing to his wife on account of her being a partner in the same partnership firm nor the income accruing to his minor children on account of their being admitted to the benefits of such partnership firm, can be included in the total income of such person neither in his individual assessment nor in the assessment of the HUF. In view of the above decision of the Supreme Court, we answer the question referred to us in the affirmative and against the Department. No costs.