1984 (7) TMI 70

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.... JAGANNATHA SHETTY J.-This is a reference under s. 256(1) of the I.T. Act, 1961, at the instance of the Revenue. The following question has been referred by the Income-tax Appellate Tribunal, Bangalore Bench, for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the declaration by Sri K. N. Narayan dated July 16, 1969, throwing his interest in the partne....

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....n whereby the joint family has to bear the risk and liability of the business and, therefore, he held that the declaration made by the assessee has to be ignored altogether. Being aggrieved by the order of the Commissioner, the assessee preferred an appeal before the Tribunal. The Tribunal allowed the appeal and reversed the order of the Commissioner. It has followed the decision of the Income-tax....

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....a case is to establish a clear intention to waive separate rights. The position in Hindu law with regard to the karta entering into partnership with others by investing family funds for carrying on a business is also equally well-settled. The partnership that is so created will be governed by the provisions of the Indian Partnership Act, 1932. Such partnership is not between the family and the ....

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....n as to what should be the procedure for assessment in a case where the karta as partner has contributed family funds to the capital of the firm. The learned counsel frankly submitted, and in our opinion rightly, that the karta would be accountable to the joint family and that share income should be brought to tax only in the HUF assessment, and not in the assessment of the individual. If that is ....