Law:

Section:

Section 64, read with section 260 of the Income-tax Act, 1961 [Corresponding to section 16(3), read with section 66(5) of the Indian Income-tax Act, 1922] - Transfer of assets - For benefit of spouse etc. - Assessment year 1951-52 - Assessee, his wife and three sons constituted a partnership, which was assessed as unregistered firm - Revenue refused registration which was upheld by Tribunal - On reference, High Court allowed registration - Tribunal under section 66(5) directed ITO to make modifications consequential to grant of registration - ITO while carrying out that direction included in assessee's assessment share income of his wife and two minor sons under section 16(3) of 1922 Act - Whether inclusion of income under section 16(3) of 1922 Act in assessee's assessment was by no means a consequence of registration; but registration or no registration, in either case, income under section 16(3) of 1922 could be included in assessee's assessment, though there might be difference in tax effect - Held, yes FACTS The assessee originally was a member of a HUF. There was a partition on 11-3-1939. Thereafter, the assessee, his wife and three sons, the first of whom was a major and the last two were minors at the relevant time, constituted a partnership, the minors having been admitted to the benefits of the partnership. The assessee was assessed to income-tax for the assessment year 1951-52, treating the firm as an unregistered one. In the assessment order, his share income was shown but, as a loss was returned with regard to the unregistered firm, the assessee was not taxed. Against the order of the ITO, refusing registration of the firm, there was an appeal to the Tribunal, which concurring with the revenue, dismissed it. However, on reference the firm was granted registration order under section 66(5). The revenue submitted before the Tribunal that the share income of the petitioner's wife and his two minor sons had to be included under section 16(3) in the petitioner's assessment, and section 33(5) was relied on for this purpose. The Tribunal declined to make any such direction. The Tribunal then made the order under section 66(5) disposing of the appeal…

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