R.K.ABICHANDANI,J. - (1.)THE Tribunal, Ahmedabad Bench "B", has referred to the High Court for its opinion under S. 256(1) of the IT Act, 1961 (hereinafter referred to as "the said Act"), the following questions : At the Revenue's instance :
" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share income received by Ramanlal from the partnership firm, Nahalchand Dhanjibhai and Co., during the previous year under consideration was taxable in his hands in his capacity as Karta of the smaller HUF comprising himself, his wife and their two unmarried daughters? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share incomes derived by Rajendrakumar and Dilipkumar two minor sons of partner, Ramanlal, from the partnership firm, Nahalchand Dhanjibhai and Co., during the previous year under consideration were not clubbable with the share income derived by Ramanlal from the said firm if that share income was taxable in Ramanlal's hands in his capacity as Karta of the smaller HUF ?" At the assessee's instance : " (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share income derived by partner, Ramanlal, from the partnership firm, Nahalchand Dhanjibhai and Co., during the previous year under consideration was to no extent taxable in the hands of the larger HUF comprising Ramanlal, his wife and their major son Jayantilal, their minor sons Rajendrakumar and Dilipkumar and their minor unmarried daughters ?"

(2.)THE assessee, Ramanlal, in the return filed by him for the asst. year 1972 73, claimed that the share income derived by him from the partnership firm, Nahalchand Dhanjibhai & Co., was taxable in his hands as Karta of the smaller HUF consisting of himself, his wife and two unmarried daughters.
By a partnership deed dated November 15, 1958, the firm of Nahalchand Dhanjibhai and Co. was constituted consisting of the assessee, Ramanlal, and his brother, Rasiklal, both representing their respective HUFs. The share income of these two partners was, admittedly, assessed in their hands as Kartas of their HUFs up to the asst. year 1971 72. By a partnership deed dated November 24, 1970, the partnership was reconstituted as effective from October 31, 1970, when three sons of the assessee and three sons of Rasiklal were admitted to the benefits of the partnership. The assessee's son, Jayantilal, become a major in May, 1971.

(3.)DURING the asst. year 1971 72, it was claimed that a partial partition of the movable property of Ramanlal's HUF had taken place amongst the members of the said HUF w.e.f. Aso Vadi 30 of S. Y. 2026. The ITO, therefore, made an order dated October 13, 1971, under S. 171(3) of the said Act to the effect that the capital of the HUF of Ramanlal lying in the firm and amounting to rupees one lakh was divided between Ramanlal and his three sons, Jayantilal, Rajendrakumar and Dilipkumar, each getting Rs. 20,000 and that a similar amount of Rs. 20,000 came to the share of Ramanlal's wife, Savitaben. The assessee claimed that the share income from the partnership for the year under consideration should be taxed in his hands in his capacity as the Karta of the HUF as it had been done up to the asst. year 1971 72. The ITO rejected this contention on the ground that, after the partial partition, Ramanlal being the only coparcener, he, his wife and his unmarried daughters did not constitute an HUF. As regards the share income in question, the ITO decided to treat it as individual's income. The income derived by the two minor sons of the assessee from the said firm by reason of their having been admitted to the benefits of the partnership was also included in the computation of the assessee's total income under S. 64(ii) of the said Act. The order of the ITO dated February 17, 1975, was challenged by the assessee in appeal before the AAC who confirmed the findings of the ITO holding that, after partition of the capital invested in the firm of Nahalchand Dhanjibhai, the assessee became the owner of the reduced investment in the new firm in his individual capacity and that the said fact warranted the assessment of the share income in the assessee's hands as an individual. The matter was carried to the Tribunal by the assessee. The Tribunal found that, from the new partnership deed dated November 24, 1970, it was clear that the partition in question had taken place in respect of the business of the respective HUFs of Ramanlal and Rasiklal and, therefore, it could be correctly inferred that the right to share the profits from the firm also stood partitioned. In this view of the matter, the Tribunal held that it was not possible to accept the assessee's contention that the assessee's larger HUF's right to a share in the profits of the firm remained undivided and intact in spite of the partial partition of the capital amount as recorded by the ITO. The Tribunal further held that, on the date of the partition, Ramanlal constituted an HUF along with his wife and unmarried daughters even though he was the sole coparcener in the said HUF. The Tribunal held that the fact that, at the time of the partition, Ramanlal's wife was also given Rs. 20,000 being the amount equal to that which was given to each of the three sons and to Ramanlal himself was of no significance and the portion that fell to the share of Ramanlal on partition belonged to the smaller HUF which comprised Ramanlal, his wife and their unmarried daughters. The Tribunal reached this conclusion relying on the decision of the Supreme Court in Gowli Buddanna vs. CIT (1966) 60 ITR 293 (SC). The Tribunal, therefore, held that the amount of Rs. 20,000 which belonged to the smaller HUF of Ramanlal was an investment in the new firm to the detriment of the smaller HUF and the share income derived from the new firm on the strength of the fresh partnership agreement coupled with the said capital contribution would constitute income of the smaller HUF of Ramanlal and the share income in question would not be taxable in the hands of Ramanlal as an individual. As a consequence, the Tribunal held that the share income of the two minor sons could not be clubbed with the income of the HUF under s. 64 of the said Act.