Consequential modifications after firm registration do not by themselves permit clubbing of wife and minor sons' income.

A general direction to give effect to consequential modifications after registration of a firm does not, by itself, authorise inclusion of the wife's and minor sons' income in the assessee's assessment. The article explains that such inclusion is not a necessary consequence of registration, because liability under the relevant clubbing provision may arise whether the firm is registered or unregistered, even though the tax effect may differ. Accordingly, broad language in the Tribunal's order could not be treated as permitting reopening of the assessment on that basis, and the Commissioner's contrary reading was incorrect.

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Issues: Whether the Tribunal's direction under section 66(5) to make consequential modifications on registration of the firm authorised inclusion of the assessee's wife and minor sons' income under section 16(3) in the assessee's assessment.

Analysis: The order of the Tribunal had expressly declined to direct inclusion under section 16(3) when disposing of the appeal after the High Court's answer in the reference. The only direction made was that modifications consequential to the grant of registration could be carried out in the partners' hands. Inclusion of income under section 16(3) is not a consequence of registration of the firm, because such inclusion may arise whether the firm is registered or unregistered, though the tax effect may differ. The general words used by the Tribunal therefore could not be read as authorising the Income-tax Officer to reopen the assessment on that ground. The Commissioner was thus in construing the Tribunal's order as permitting the inclusion.

Conclusion: The Tribunal's order did not authorise inclusion of the wife and minor sons' income under section 16(3), and the assessee succeeded in challenging the Commissioner's view.

Ratio Decidendi: A direction to give effect to consequential modifications following registration of a firm does not, without express words, authorise inclusion of income under section 16(3), because such inclusion is not a necessary consequence of registration.

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