R.R. Rastogi, J. - (1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961 (hereinafter " the Act") and at the instance of the assessee the following question of law has been referred by the Income-tax Appellate Tribunal, Delhi Bench-D (hereinafter " the Tribunal "), for the opinion of this court ; " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the share income of Sidhartha Prasad and Rahul Prasad, the minor sons of the assessee, from the firm, M/s. Arvind Cold Storage had been rightly included under Section 64(ii) of the Income-tax Act, 1961, as the income of the assessee ? "
(2.) THE material facts are these. THE assessment year involved is 1972-73, the corresponding accounting period ended March 31, 1972. THE assessee, Sahu Govind Prasad is an individual. He is a partner of a firm, M/s. Arvind Cold Storage by name, as karta of his HUF. His two minor sons, Sidhartha Prasad and Rahul Prasad, were admitted to the benefits of partnership in this firm. THE ITO treated the share of the profit of these minor sons of the firm as income of the assessee and included the same in his total income. Aggrieved, the assessee filed an appeal before the AAC, which failed and then took up the matter in further appeal before the Tribunal. For the assessment years 1967-68 to 1969-70, in the case of the assessee and his brother, Madho Prasad, both of whom were partners of this firm as representing their respective HUFs, and minor sons of both of whom were admitted to the benefits of partnership in this firm, this court had, agreeing with the revenue authorities and the Tribunal, taken the view that the share of each of the minors in the profits of the firm was liable to be included in the income of their respective fathers in their individual status under Section 64(l)(ii). This decision is Madho Prasad v. CIT [1978] 112 ITR 492 (All); following that decision the Tribunal agreed with the revenue authorities and dismissed the appeal. As stated earlier, at the instance of the assessee the question mentioned above has now been referred to this court. It was submitted before us on behalf of the assessee by Sri Bharathji Agarwal that the decision in Madho Prasad's case [1978] 112 ITR 492 (All), requires reconsideration for two reasons: Firstly, the decision of the Supreme Court in CIT v. Sodra Devi [1957] 32 ITR 615, which lays down that the income of a minor child cannot be included in the total income of his mother under Section 16(3)(a)(ii) of the 1922 Act, was not taken notice of; and, secondly, that the Explanation to Sub-section (1) of Section 64 of the Act was also not brought to the notice of their Lordships in that case. The learned standing counsel, on the other hand, urged before us that this court has already taken a view on this controversy in Madho Prasad's case [1978] 112 ITR 492 (All), and if the assessee was aggrieved against that decision, he could have taken the matter in appeal to the Supreme Court. According to the learned counsel there is no proper reason for a reconsideration of that decision, and, further, the decision in Sodra Devi's case [1957] 32 ITR 615 (SC), is not applicable because it was rendered under a different Act and also on a different set of facts. After a careful consideration of the respective submissions we find that the decision in Madho Prasad's case [1978] 112 ITR 492 (All), requires reconsideration. We shall first refer to the relevant provisions of the Act. Section 4 of the Act enacts charge of income-tax. Sub-section (1) of this section imposes income-tax upon a " person " in respect of his income. The scheme of the charging provision of this Act is the same as that of the corresponding provisions of the 1922 Act. Section 2(7) contains the definition of the word " assessee ". According to this definition assessee means " a person by whom any tax or other sum of money is payable under this Act" and includes every person in respect of whom any proceeding is taken for the assessment, (a) of his income, (b) of his loss, or (c) of the amount of refund due to him. In other words, this definition covers two categories: Firstly, persons by whom any tax, penalty or interest is payable under this Act, whether any proceedings under this Act has been actually taken against them or not and, secondly, persons against whom any of the proceedings specified under this clause has been taken, whether they are or are not liable to pay any tax, penalty or interest.
(3.) UNDER Section 2(31) "person" includes, (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (vj an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial judical person, not falling within any of the preceding sub-clauses. Then we turn to Section 64 which occurs in Chap. V. This chapter makes provisions for inclusion of income of other persons in the assessee's total income. Section 64 provides for inclusion of the income of spouse, minor child, etc., in the income of an individual. We extract the relevant portion below : " Section 64(1). In computing the total income of any individual, there shall be included all such income as arises directly or indirectly : (i) to the spouse of such individual from the membership of the spouse in a firm carrying on a business in which such individual is a partner ; (ii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner. Explanation.--For the purpose of Clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of Clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater; and where any such income is once included in the total income of either spouse or parent, any such income arising in any succeeding year shall not be included in the total income of the other spouse or parent unless the Income-tax Officer is satisfied, afler giving that spouse or parent an opportunity of being heard that it is necessary so to do. " ;