COMMISSIONER OF INCOME TAX Vs. SRINIVAS AND COMPANY

JUDGEMENT

(1.) .

(2.) THE above tax cases are posted before the Full Bench as a Division Bench of this Court felt that the earlier decision of this Court in the case of CIT vs. Srinivas & Co. requires reconsideration by a Full Bench of this Court.

(3.) A similar question on the interpretation of the provisions found in s. 23(5)(a) of the Act 1922 came up for consideration before this Court in the case of Gnanam & Sons vs. CIT and a Bench of this Court has held that under the proviso to s. 23(5)(a) of the Act 1922 which deals with assessment of a non-resident partner's share in a registered firm, the total income of the non-resident partner does not come in for assessment at all, and it is only his share income from the firm that is made liable for assessment, and the sum so determined as payable is made payable by the firm. The above decision of this Court in Gnanam & Sons case (supra) was approved by the Supreme Court in the case of R. M. Ramanathan Chettiar vs. CIT and the Supreme Court has held that a non-resident partner of a registered firm is not entitled to exclude from his share income from the firm determined under s. 23(5) of the Act 1922, i.e. income accruing or arising to the firm without the taxable territories by the operation of s. 4(1)(c) of the Act, 1922. In our opinion, the underlying principle laid down by the Supreme Court in R. M. Ramanathan Chettiar's case and by this Court in Gnanam & Sons case is that the share income of a non-resident partner in a registered firm is alone the subject-matter of consideration in making the assessment of his share income on the firm under the provisions of the Act and it is not open to the partner to exclude from the share income any other income on the ground that it is exempt or not taxable in view of some other provisions of the Act. We are of the opinion that when there is no scope for exclusion of any amount from the share income of the partner for assessment of the share income there is also no scope for inclusion or addition to the share income of the non-resident partner by the Department. There cannot be one view for exclusion and a different view for inclusion of certain amounts to the share income. In our opinion, the emphasis laid down by the Supreme Court is that it is only the share income of the partner that should be the subject-matter of consideration under s. 23(5)(a) of the Act, 1922, and neither more nor less.