COMMISSIONER OF INCOME TAX Vs. ABHAY KUMAR

JUDGEMENT

(1.) THIS reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue is to answer the following question of law, namely :

(2.) THE relevant assessment year is 1976-77. THE assessee is the Hindu undivided family represented by its karta, Abhay Kumar. Nitesh Kumar, minor son of the said Abhay Kumar, was admitted to the benefits of the partnership in a firm during the relevant period. THE question was whether the share income of a minor, Nitesh Kumar, could be clubbed with the income of the assessee-Hindu undivided family represented by Abhay Kumar as karta for the purpose of computing the total income of the assessee-Hindu undivided family in accordance with Section 64(l)(iii) of the Act. It is not for the purpose of clubbing the share income of the minor, Nitesh Kumar, with the income of his father, Abhay Kumar, as an individual, that Section 64(l)(iii) of the Act was relied on. THE assessee contended that Section 64(l)(iii) was not attracted since the assessee was the Hindu undivided family represented by its karta, Abhay Kumar, and not by Abhay Kumar as an individual. THE Income-tax Officer rejected this contention. However, the Appellate Assistant Commissioner, on appeal, accepted the assessee's contention and held that the share income earned by the minor could not be clubbed in the hands of the assessee-Hindu undivided family. THE Tribunal has affirmed that view. Hence, this reference at the instance of the Revenue.

(3.) WE also find that the High Courts of Andhra Pradesh, Bombay, Delhi, Gujarat, Punjab and Haryana and Karnataka have taken the same view and made a similar construction of Section 64(l)(iii) of the Income-tax Act, 1961. These decisions are CIT v. Sanka Sankaraiah [1978] 113 ITR 313 (AP), Dinubhai Ishvarlal Patel v. K. D. Dixit, ITO [1979] 118 ITR 122 (Guj), CIT v. Anand Sarup [1980] 121 ITR 873 ( P & H), CIT v. N. P. Khedkar [1986] 157 ITR 276 (Bom), Prayag Dass Rajgarhia v. CIT [1982] 138 ITR 291 (Delhi) and C. Arunachalam v. CIT [1985] 151 ITR 172 (Kar) [FB]. The decision of the Karnataka High Court is by a Full Bench and it is sufficient to refer to that alone since it considers this question at considerable length referring also to the change made in the 1961 Act as compared with the corresponding provision in the 1922 Act. Moreover, the Karnataka decision also considers the Full Bench decision of the Allahabad High Court in Sahu Govind Prasad v. CIT (1983] 144 ITR 851, which was relied on to support the contrary view. With respect, we find ourselves in agreement with the conclusion as well as the reasons on which that conclusion is based in the Karnataka decision. Accordingly, we do not find it necessary to reiterate the same here. WE may, however, add that the decision of the Full Bench of the Allahabad High Court in Sahu Govind Prasad's case [1983] 144 ITR 851, itself accepts the dual capacity of the "individual" and it also indicates that it is in the karta's assessment as an "individual" and not in his representative capacity on behalf of the Hindu undivided family that the minor's income is to be clubbed. With respect, these observations in the Allahabad decision also support the construction we have made of Section 64(l)(iii) which is in accord with the view of the other High Courts as already indicated by us.