Family funds and karta representation made partnership income taxable in the hands of the Hindu undivided family.

A Hindu undivided family need not be a direct partner to be assessed on partnership income if the karta entered the partnership on behalf of the family and the surrounding facts show family ownership of the venture. Here, the capital was contributed from family funds, the partnership interests stood in the family name, and the family accounts recorded the income as its own receipt. The Tribunal's finding that the karta acted representatively was supported by sufficient material, so the managing agency income was assessable in the hands of the Hindu undivided family.

---

---

Issues: Whether the share of managing agency income earned by the karta in a partnership, on the facts found, was assessable as the income of the Hindu undivided family.

Analysis: A Hindu undivided family may not itself be a direct contracting party to a partnership, but it can act through its karta. Where the karta enters a partnership on behalf of the family, using family funds and the surrounding facts show that the income was received and treated as family income, the income may properly be attributed to the family. On the facts found, the capital contribution was made from family funds, the related shares stood in the family name, and the family books recorded the partnership income as its receipt. The Tribunal's finding that the karta acted as representative of the family was supported by sufficient material.

Conclusion: The income was rightly included in the assessment of the Hindu undivided family.

Final Conclusion: The reference was answered in favour of the revenue, and the partnership income was held taxable in the hands of the Hindu undivided family.

Ratio Decidendi: Where a karta enters a partnership on behalf of a Hindu undivided family and the facts show that the partnership income was earned with family funds and belonged to the family, such income is assessable as the income of the family.

---