Partner's share in firm profits is business income under the 1922 Income-tax Act, not income from other sources.

A partner's share of profits from a registered firm under the Indian Income-tax Act, 1922 is assessable in the partner's hands as business income under section 10, because the share does not retain the separate character of the firm's constituent heads for individual assessment. The contrary approach of dissecting the partner's share into the heads applicable to the firm was rejected. The later apportionment rule in section 67(2) of the 1961 Act was treated as applying prospectively and not governing assessments under the 1922 Act.

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Issues: Whether the sums representing dividend income earned by the partnership firms, when brought into the assessment of the partner, were to be treated as income from business under section 10 of the Indian Income-tax Act, 1922, or as income from other sources.

Analysis: The reference turned on the true character of a partner's share in the income of a registered firm under the 1922 Act. The Court preferred the principle that a partner's share in the profits of a firm is business income in his hands and does not retain, for individual assessment, the separate character of the different heads under which the firm itself was assessed. The scheme of the 1922 Act, read with the binding effect of the Supreme Court's pronouncement in Ramniklal Kothari, supported the view that the partner's share is assessable as profits and gains of business under section 10. The contrary view that the income should be dissected under the heads applicable to the firm was rejected, and the later provision in section 67(2) of the 1961 Act was treated as introducing the apportionment rule for the future rather than governing the 1922 Act.

Conclusion: The sums were income from business in the hands of the assessee-partner and not income from other sources.

Ratio Decidendi: Under the Indian Income-tax Act, 1922, a partner's share in the profits of a firm is assessable in his hands as income from business, and the income does not retain the separate character of the firm's constituent heads for the purpose of individual assessment.

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