Law: Income Tax Act, 1961

Section: 64,64(1)(i)

(a) Income-tax--Total income---Inclusions---Hindu undivided family---Income of spouse or minor child of individual from firm in which individual is partner---Karta partner of firm representing HUF---Income from firm not his individual income but that of HUF---Income of spouse or minor child from firm not includible therein---Indian Income Tax Act, 1961, S. 64(1)(i), (ii) [before amendment w.e.f. 1-4-1976]---[Sahu Govind Prasad v. CIT (1983) 144 ITR 851 (All.); Madho Prasad v. CIT (1978) 112 ITR 492 (All.); CIT v. Balasubramaniam (S.) (1984) 147 ITR 732 (Mad.) and CIT v. Shri Manakram (1990) .183 ITR 382 (MP) overruled]. When the Karta of a Hindu undivided family is a partner in a partnership firm, he has a dual capacity; qua the partnership, he functions in his personal capacity and qua third parties, in his representative capacity. Under the Income Tax Act, 1961, when he is assessed in respect of the income derived by him from the partnership firm as partner, it is in his representative capacity as Karta of the Hindu undivided family and not as an individual as such. That is because his capacity vis-a-vis his spouse/minor children who are members of the Hindu undivided family is that of Karta and not as individual though vis-a-vis other partners of the partnership firm he functions in his personal capacity. This being the position, the income of a Karta's spouse/minor child cannot be included in the computation of his total income for that is the income of the Hindu undivided family and, not his individual income, section 64 of the Income Tax Act, 1961, will be attracted only when an assessee's own income is being assessed and not that of a Hindu undivided family. If a Karta is brought within the ambit of "individual" in section 64(1), the share income of the spouse of the Karta and his minor children will, in effect, be included in the income of the Hindu undivided family which is not what is contemplated by section 64(1)(i) and (ii) and which is impermissible. Under section 4 of the Income Tax Act, 1961, the charging section, the total income of the previous year or years of every person is charged for any assessment year at the rate or rates prescribed by…

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