Minor share income clubbing under tax law excluded where binding Supreme Court precedent governs identical partnership facts.

Minor sons' share income from a partnership firm, where they were admitted only to the benefits of partnership and their fathers were partners as kartas of Hindu undivided families, was not includible in the assessee's income under section 64(1)(iii). The controlling principle was that binding Supreme Court precedent on the same legal question governed the reference, and contrary High Court decisions did not displace that authority; the Madras decision cited was treated as distinguishable on facts. The reference was therefore answered against the Revenue and in favour of the assessee.

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Issues: Whether the share income of the minor sons from a partnership firm, where they were admitted only to the benefits of partnership and their fathers were partners in representative capacities as kartas of Hindu undivided families, was includible in the assessee's income under section 64(1)(iii) of the Income-tax Act, 1961.

Analysis: The issue was governed by an identical question already answered by the Supreme Court against the Revenue and in favour of the assessee. The controlling principle applied was that the minor sons' share income in such a partnership arrangement was not liable to be clubbed in the assessee's hands under section 64(1)(iii). The reliance placed on contrary High Court decisions did not displace the effect of the Supreme Court's ruling, and the cited Madras decision was treated as distinguishable on facts.

Conclusion: The question was answered in the affirmative and against the Revenue. The share income of the minor sons was not includible in the assessee's income under section 64(1)(iii).

Final Conclusion: The reference was decided in favour of the assessee by applying the binding Supreme Court precedent on the same legal question.

Ratio Decidendi: Where the Supreme Court has authoritatively held that a minor's share income from a partnership firm is not clubbable in the hands of the parent under section 64(1)(iii), the same view must govern subsequent references on identical facts.

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