COMMISSIONER OF INCOME TAX Vs. D JAGADISHWAR

JUDGEMENT

(1.) The questions referred by the Income-Tax Appellate Tribunal for the opinion of this Court are as follows:

(2.) The facts in brief are as follows: The relevant assessment years are 1973-74,1974-75, 1976-77 and 1979-80. The assessee is an individual and also a kartha of hindu undivided family consisting of his wife and five minor sons. Beforehis last son Master Venugopal was born, there was partial partition in respect of the capital invested in two partnership firms, viz. M/s. Kisan Stores and M/s. Vishnulaxmi Rice Mill on 29-10-1970 between him and his four sons. The partial partition was recognised by the Income-Tax Officer as per his order dated 24-2-1974. Master Venugopal was born shortly thereafter. He is admitted to the benefits of partnership on 6-11-1972. The assessee contended that for the purpose of partnership he along with his wife and minor son Master Venugopal formed a separate smaller Hindu undivided family excluding his other sons. It is also his case that he along with his wife together with all his other sons continues to exist as a larger Hindu undivided family in respect of other properties. The Income-Tax Officer assessed the smaller Hindu undivided family separately for the relevant assessment years in a seperate file. The divided minor sons who were admitted to the benefits of partnership after the partial partition were also similarly assessed independently on their own names. The Income-Tax Officer, however, later came to a different conclusion that the assets received on 29-10-1970 belonged to the assessee in his individual capacity only as at the relevant time, he and his wife alone were there, since his wife had been given Rs. 5,000.00 at the time of partial partition, the assessee is interested in his individual capacity on the share income and not in the status of the family. If he is an individual partner in the firm, the incomes of the minors admitted to the benefits of partnership are also to be aggregated under Section 64 for assessment years 1973-74, 1974-75 and 1975-76. Even otherwise, it had to be aggregated for assessment years 1976-77 and 1979-80 as amendment was brought into effect from 1-4-1976.

(3.) On appeal, the appellate authority excluded the income of the minors for the assessment years 1973-74 to 1976-77. On further appeal, the Tribunal held that mere provision of Rs. 5,000.00 to the wife of the assessee does not make the joint family cease to exist and the Hindu undivided family continues to exist and it is a smaller Hindu undivided family. If it is a smaller Hindu undivided family the assessee is liable to be assessed as such in so far as the income of the two firms is concerned. If the assessee is to be assessed as a smaller Hindu undivided family in so far as the income of the two firms the income of the minors who were admitted to the benefits of the partnership firm cannot be included in view of the partial partition. However, at the instance of revenue the questions set out in the earlier paragraphs were referred for the opinion of this Court.