Clubbing of minor children's partnership income upheld where karta-partner is treated as an individual under tax law.

For section 64(ii) of the Income-tax Act, 1961, a karta who is a partner in a firm is treated as an individual. On that construction, the share income of minor children admitted to the benefits of the partnership is clubbed with the income of that individual. The ruling therefore supports inclusion of the minors' partnership income in the assessee's taxable income where the assessee was the firm's partner in a representative capacity.

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Issues: Whether the share income of the assessee's minor sons and minor daughter from a partnership firm, to the benefits of which they were admitted, could be included in the assessee's income under section 64(ii) of the Income-tax Act, 1961 when the assessee was a partner in the firm as karta of a Hindu undivided family.

Analysis: The issue was held to be covered by an earlier Division Bench decision. Applying the principles laid down by the Supreme Court, it was held that a karta who is a partner in a firm is an individual within the meaning of section 64(ii). On that construction, the income of minor children admitted to the benefits of the partnership is liable to be clubbed with the income of such individual.

Conclusion: The question was answered in the affirmative. The minor children's share income was includible in the assessee's income under section 64(ii), in favour of the Revenue and against the assessee.

Ratio Decidendi: For the purposes of section 64(ii) of the Income-tax Act, 1961, a karta who is a partner in a firm is an individual, and the share income of minor children admitted to the benefits of that partnership is includible in that individual's income.

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