Commissioner of Income Tax vs Baidyanath Prasad Agrawal

These two tax case references are at the instance of the Revenue, referred by the Income Tax Appellate Tribunal u/s 256(1) of the Income Tax Act, 1961, for decision of this court.

The common question of law that arises in these two cases for the two assessment years 1979-80 and 1980-81 reads as follows :

" Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the share income of the minor sons of the assessee from the partnership-firm in which they are admitted to share the profits only and in which their respective fathers are partners in their representative capacities as kartas of the Hindu undivided families are not includible in the income of the assessee in terms of Section 64(1)(iii)?"

The Tribunal for answering the question in favour of the assessee placed reliance on the Andhra Pradesh High Court judgment in Commissioner of Income Tax Vs. Sanka Sankaraiah, , another judgment of the Gujarat High Court in Dinubhai Ishvarlal Patel Vs. K.D. Dixit, Income Tax Officer, Ahmedabad and Others, and also on the Punjab and Haryana High Court in Commissioner of Income Tax Vs. Anand Sarup, .

On the other hand, the Department relied on two judgments of the Allahabad High Court in Madho Prasad Vs. Commissioner of Income Tax, and Sahu Govind Prasad Vs. Commissioner of Income Tax, .

Learned counsel appearing for the Revenue, apart from the cases cited above, proceeded to rely on another judgment of the Madras High Court in Commissioner of Income Tax, Tamil Nadu-I Vs. S. Balasubramaniam, .

We have gone through the judgment. In view of the recent judgment of the Supreme Court on an identical question, in Commissioner of Income Tax (Central), Ludhiana and Others Vs. Harbhajan Lal and Others, , wherein their Lordships, of the Supreme Court, applying the ratio laid down in L. Hirday Narain Vs. Income Tax Officer, Bareilly, , have answered an identical question against the Revenue and in favour of the assessee, we are relieved of writing a reasoned judgment. Learned counsel appearing for the Revenue, however, contended that this judgment of the Supreme Court must be taken as one not decided on the merits. But, we find from the judgment of the Supreme Court in particular the following sentence that their Lordships have also decided the matter on merits (page 364) :

" We are also not satisfied that there are good and compelling reasons to depart from the view taken in L. Hirday Narain Vs. Income Tax Officer, Bareilly, . ..."

We may also mention that the decisions relied on by the Tribunal were also noticed by the Supreme Court. The decision cited in Commissioner of Income Tax, Tamil Nadu-I Vs. S. Balasubramaniam, on a close scrutiny will show that it is distinguishable on the facts.

In view of the above and in view of the fact that the Supreme Court has answered an identical question against the Revenue, applying the ratio laid down by the Supreme Court the common question referred to us is answered in the affirmative and against the Revenue. There will be no order as to costs.