Law:

Section:

Section 4 of the income-tax act, 1961-Hindu undivided family-Assessablity of-Partial partition of huf comprising of assessee, his wife and two minor sons was effected-each allotted equal share-Subsequently partnership firm formed wherein equal shares given to all members-Whether share income from said firm was income of huf consisting of assessee and his wife-Held, on facts, no-Whether assessee's share income was to be assessed as assessee's individual income and share income of minor sons was also includible in assessee's income under section 64-Held, on facts, yes Facts There was a partial partition of the HUF, comprising of the assessee, his wife and two minor children. An equal share was allotted to each of them. After the partition, a partnership firm was set up wherein equal shares were given to each member of the family including the wife. Up to the assessment year 1969-70, the assessee filed his return in the status of an individual in respect of his share income from the firm and the share income of his two minor sons from the partnership was included in his income under section 64. Subsequently, the assessee filed returns in respect of share income from the said partnership in the status of a HUF consisting of himself and his wife. The ITO rejected this status and assessed the assessee in his individual status. On appeal, however, the AAC accepted the assessee's contention and further held that the share income of the minor sons could not be included under section 64, in the assessee's income. On further appeal, the Tribunal confirmed the AAC's order. On reference : Held The instant case concerned only the income from the property which was the subject-matter of the partial partition and which was invested in the partnership. Had the assessee's wife not been allotted any share in the partial partition, the matter would have been simple and there would have been no difficulty in holding that the assessee and his wife constituted a HUF. However, as the wife had also been allotted a share, it was impossible to hold that the assessee and his wife, after the partial partition, constituted a HUF in respect of the said property. Accordingly, the share income…

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