Double taxation of partnership share income barred where partners were already validly assessed on the same income.

Share income of an unregistered firm, once validly assessed in the hands of the partners, could not be brought to tax again in the hands of the firm. The court applied the principle against double assessment of the same income and recognised that partners of an unregistered firm may be assessed either individually or in the firm's collective status, but not twice on the same receipts. Because the partners' earlier assessments remained valid, the fresh assessment on the firm for the same income was impermissible and the issue was answered in favour of the assessee.

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Issues: Whether an unregistered firm could be assessed after the same share income of its partners had already been taxed in the partners' individual assessments.

Analysis: The assessment of the same income in the hands of the partners and again in the hands of the unregistered firm was held impermissible. The legal position applied was that partners of an unregistered firm may be assessed either individually or collectively in the status of the firm, but the revenue cannot tax the same income twice. The earlier assessments of the partners having remained valid, a fresh assessment of the firm on the same income could not stand.

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

Ratio Decidendi: Where the share income of an unregistered firm has already been validly assessed in the hands of the partners, the same income cannot be assessed again in the hands of the firm.

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