RAJENDRA NATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these fifteen cases, four common questions of law are referred to this court by the Tribunal. They can, therefore, be disposed of under a common order. It would be sufficient if we refer to the question stated in ITR No. 904 of 1978 : Sri Rajendra Nath v. CIT. The questions stated are as under :

(2.) WHETHER, on the facts and circumstances of the case, the Tribunal was legally correct in holding that the indenture dated April 22, 1971, created sub-partnership ?

(3.) ACCORDING to the Mitakshara school of Hindu law, a karta/father is entitled to effect partition of joint family property between himself and the other members of the family. This right is not affected by the presence of minor members in the joint family. Even if a member of the joint family is of unsound mind, he may be represented by a guardian and a valid partition may be effected. That is what precisely has happened in this case. In the case of the smaller Hindu undivided families of Rajendra Nath and Jagdish Prasad, there were minors while, in the case of Vishwamitra's Hindu undivided family, one of the sons of Vishwamitra was of unsound mind and was represented by his guardian/father. We are, therefore, of the opinion that the said indenture can be treated as a deed of partition, but this is not the end of the problem. The indentures in question in the cases of Rajendra Nath and Jagdish Prasad go further and say that the minor members of the family shall not be liable for losses. This recital clearly discloses that what was also sought to be done in the said indenture was to bring into existence a sub-partnership as well wherein the minors were admitted to the benefits of partnership. It is well-settled that we have to read the document as a whole to understand its true nature and purpose. Reading the document in the cases of Rajendra Nath and Jagdish Prasad as a whole, we are of the opinion that the Tribunal was not in error in holding that indentures in their cases did also bring into existence a sub-partnership, to the benefits of which the minors were admitted. Once this is so, Clause (i) of Sub-section (1) and Clause (iii) of Sub-section (1) of Section 64 of the Act are attracted and the income received by the wife and the minor children would be included in the income of the husband/ father. The judgment of the Tribunal is, in our opinion, right except in so far as the branch of Vishwamitra is concerned where a minor clarification is called for. In the case of this branch, there are no minors. One of the sons of Vishwamitra is of unsound mind. It is true that, in the case of the indenture executed by the members of Vishwamitra's Hindu undivided family too, an identical recital is found (to the effect that the person of unsound mind shall not be liable for loss), yet that clause is liable to be ignored in law. Section 30 of the Partnership Act which provides for admission of a minor to the benefits of partnership, does not apply or extend to a person of unsound mind. There is no other provision of law whereunder a person of unsound mind can be admitted to the benefits of partnership. If he is admitted as a partner, he would also be liable for losses. We, therefore, ignore the said clause in the case of the Hindu undivided family of Vishwamitra. It may also be noticed that Section 64 of the Act does not apply to the income received by a person of unsound mind. Section 64 provides only for inclusion of the income received by a spouse or by a minor child but not by a major son who is of unsound mind. In this view of the matter, Section 64 of the Act cannot be applied in the case of Vishwamitra to the extent of the income received by the son of unsound mind.