HUF taxation of partnership share income upheld where binding precedent allowed assessment in the family's hands.

Share income from a partnership firm was treated as capable of being impressed with the character of Hindu undivided family property, so it could not be assessed in the individual's hands when binding precedent supported assessment in the HUF's hands. The appellate authorities accepted that the partner's share income belonged to the HUF on the facts and legal position, and the individual assessment could not stand. The reference was answered in favour of the assessee and against the Revenue, with the income directed to be excluded from the individual assessments and taxed in the hands of the Hindu undivided family.

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Issues: Whether the share income from the partnership firm was assessable in the hands of the assessee as an individual or as the Hindu undivided family.

Analysis: The assessment in the individual's hands had been sustained by the Income-tax Officer after fresh proceedings, but the appellate authorities deleted the addition on the footing that a partner's share in partnership income could be impressed with the character of joint family property. The issue was governed by earlier binding decisions holding that such share income can validly belong to the Hindu undivided family and, on that basis, be assessed in its hands.

Conclusion: The share income was rightly directed to be excluded from the individual assessments and assessed in the hands of the Hindu undivided family; the answer to the reference was in the affirmative and against the Revenue.

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