Clubbing of minors' share income under tax law applies even where the partner acts as karta in a representative capacity.

Minors' share income was held includible in the assessee's hands under section 64(1)(ii) of the Income-tax Act, 1961, even though the assessee was a partner in a representative capacity as karta of a joint family, because the Court followed its earlier Division Bench ruling on the same point. The argument that dismissal of a special leave petition against a contrary High Court decision required reconsideration was rejected, as such dismissal does not express any view on the merits or displace binding precedent. The earlier decision therefore continued to govern the issue.

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Issues: (i) whether the share income of minors could be clubbed in the assessee's hands under section 64(1)(ii) of the Income-tax Act, 1961, where the assessee represented the joint family in the firm; and (ii) whether dismissal of a special leave petition against a contrary High Court decision required reconsideration of the binding effect of the earlier decision followed by the Court.

Issue (i): whether the share income of minors could be clubbed in the assessee's hands under section 64(1)(ii) of the Income-tax Act, 1961, where the assessee represented the joint family in the firm.

Analysis: The Court followed its earlier Division Bench decision holding that the minors' share income was liable to be clubbed in the hands of the assessee under section 64(1)(ii), even when the assessee was a partner in a representative capacity as karta of the joint family.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): whether dismissal of a special leave petition against a contrary High Court decision required reconsideration of the binding effect of the earlier decision followed by the Court.

Analysis: The Court held that dismissal of a special leave petition does not amount to an expression of opinion on the merits of the question involved and cannot be treated as disapproval of the Court's earlier decision or as a reason to reopen it.

Conclusion: The contention was rejected, and the earlier decision remained binding.

Final Conclusion: The reference was answered in favour of the Revenue by applying the earlier binding precedent on clubbing of the minors' share income, and the challenge based on dismissal of the special leave petition was rejected.

Ratio Decidendi: Dismissal of a special leave petition does not constitute affirmation on merits or disapproval of an existing precedent, and minors' share income is includible under section 64(1)(ii) of the Income-tax Act, 1961 even where the assessee is a partner in a representative capacity.

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