The High Courts of Allahabad, Madras, Madhya Pradesh & Orissa took the contrary view. The facts of the case were as follows: The respondent was a partner in partnership firm, M/s. Ruckman Cycle Industries, Ludhiana in his capacity as Karta of the H.U.F. Two minor children of respondent were admitted to the benefits of partnership Similarly, they were also partners in another partnership firm. M/s. Munjal Gases, Ludhiana. The income arising in the hands of minor children was soughtto be included in his Total Income. This was objected on the ground that he was partner in the firms, in his capacity of Karta of the HUF. So sec.64 of I.Tax Act did not apply.

I.Tax Officer rejected his contention & included the share income of minors in his total income & assessed him accordingly. The Appellate Asst. Commissioner upheld the order of assessing authority. On appeal I.Tax Tribunal Amritsar set aside the order of Appellate authority taking a contrary view. At the instance of revenue matter was referred to High Court. High court answered the question in favour of assessee and against revenue. The present appeal is against the order of High Court.

Supreme Court examined at length legislative History and sec.64 of I.tax Act. The precursor of this provision was s.16(3)(a)(i) & (ii) of the Income Tax Act 1922. While upholding the constitutional validity of the said provision of 1922 Act in Balaji vs. I.Tax Officer Special Investigation Circle, Akola (1961) 43 I.T.R. 393, the Supreme Courtobserved the above section was enacted to prevent evasion of tax by an individual doing business under a partnership entered with his wife and or minor children."

It may be mentioned that in above case the appellant did not base his challenge to the said provision as Karta of H.U.F. In Comm. of Income tax, Madhya Pradesh, Bhopal vs. Sen Sodra Devi (1957) 32 I.T.R. 615 it was held that "the words" any individual" and "such individual" in sec.64(1)(i)(ii) of the Act. To attract the provisions of sec.64(1)(i)(ii) the spouse/minor child should be partner in the partnership firm in which "any individual" is a partner.

It is only then the share income of the spouse/minor child can be included in the computation of the total income of such individual. If such individual has nil income from the partnership firm, but has income from the other sources, then the income of spouse or minor child from partnership firm in which such individual is partner will be added to that other income of such individual.

SupremeCourt referred to meaning of individual in concise Oxford dictionary & noted that in contradiction to a class or a family the term is used to denote a single person, may be male or female of the species. In a wider sense, will also be within the ambit of the term. Supreme court quoted with approval the observations in Comm.of I.Tax Madras vs. Bagyalakshmi & Co. (1965) 55 I.T.R.660 wherein the distinction between the rights & obligation of partners in partnership firm and coparceners of H.U.F. were mentioned.

"A partnership is a creature of contract. Under Hindu law a Jt. family is one of status and right to partition is one of its incidence. Except where there is a specific provision of I.tax Act which derogates from any other statutory law or personal law the provision will have to be considered in the light of the relevant branches of law. A partner may be Karta of a Joint Hindu family. He may be trustee. In such cases he occupies a dual position.

Qua the partnership, he functions in his personalcapacity; qua the third parties in his representative capacity." Under the Income tax Act, when Karta is assessed in respect of Income derived by him from the partnership firm as a partner, it is in his representative capacity as Karta of HUF & not as an individual as such.

That is because his capacity vis-a-vis spouse/minor children who are members of HUF. is that of Karta & not as an individual though vis-a-vis other partners of the partnership firm, he functions in his individual capacity. This being the position, the income of Karta's spouse/ minor child cannot be included in the computation of his total income/or that is the income of HUF & not his individual income.