Representative partner income is taxable in the firm's hands, and double taxation fails unless the same assessee is taxed twice.

Share income earned by a partner acting in a representative capacity for an assessee-firm was assessable in the hands of the firm because the partner was not receiving it in his individual capacity and the firm was the real beneficiary. Under the Income-tax Act, the firm's total income is assessed first and then apportioned among partners. Taxing the same share income in the assessee-firm's hands did not constitute double taxation merely because the income had also suffered tax in the other firm, since double taxation requires assessment of the same income twice in the hands of the same assessee. The reference was answered against the assessee and in favour of the Revenue.

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Issues: Whether the share income derived from another firm by a partner acting as representative of the assessee-firm was liable to be taxed in the hands of the assessee-firm, or whether such assessment amounted to double taxation.

Analysis: The partner in the other firm was not acting in his individual capacity but on behalf of the assessee-firm, so the real beneficiary was the assessee-firm itself. Under the Income-tax Act, 1961, the total income of a firm is to be assessed first and only thereafter apportioned among the partners. Taxing the same share income in the hands of the assessee-firm could not be described as double taxation merely because that income had already suffered tax in the other firm, since double taxation presupposes assessment of the same income twice in the hands of the same assessee.

Conclusion: The income was liable to be assessed in the hands of the assessee-firm, and the plea of double taxation failed.

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

Ratio Decidendi: Where a partner enters another firm in a representative capacity on behalf of the assessee-firm, the resulting share income is assessable in the assessee-firm's hands, and there is no double taxation unless the same income is assessed twice in the hands of the same assessee.

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