M.N.SHUKLA, J. - (1.) THE assessee was an "individual". The assessment year was 1958 - 59 for which the relevant accounting year was the year ending October 22, 1957. The assessee held 1/5th share in the firm of M/s Phool Chand Bajrang Lal, Azamgarh. He had four sons, namely, Lakshmi Narain Dalmia who was an adult on the relevant date and three minor sons, namely, Sarvasri Bansari Lal, Radhey Shyam and Girdhari Lal. The firm in question was constituted under an indenture made on November 3, 1956. The said partnership deed is on record and indicates that the partnership was started by the assessee and his adult son, Lakshmi Narain Dalmia. The minor sons were admitted to the benefits of the partnership in the firm. Under cl. 6 of the partnership deed the parties (the assessee and Lakshmi Narain Dalmia) were entitled to the profits earned and had to contribute to the losses sustained by the firm in accordance with their respective shares which were 1/5th share each. Clause 7 of the partnership deed provided that the three minors were admitted to the benefits of partnership in the firm and their respective shares were also 1/5th share each and that the minors would become partners on attaining majority. Under cl. 9 of the partnership deed the capital subscribed by the partners was to carry interest at the rate of 6 per cent. per annum. There was no provision in the partnership deed as to how much capital was to be invested by each partner.
(2.) BY virtue of S. 16(3)(a)(ii) of the IT Act, the ITO included in the assessment of the assessee the share incomes of the minor sons including the interest which was credited to their respective capital accounts in the firm's account books. The assessee filed an appeal before the AAC, who deleted the interest income from the assessment. At the stage of the appeal before the AAC, the assessee sought to raise an additional ground of objection, namely, that the correct status of the assessee should have been the "HUF" and not an "individual". The AAC refused to allow this additional ground to be raised before him. There were two cross -appeals preferred to the Tribunal The Department's appeal was directed against the order of the AAC in so far as the latter had directed that the amount of Rs. 5,331, being the amount of interest received by the minor sons from the firm, be excluded from the total income of the assessee. The assessee's appeal challenged the order of the AAC on the ground that it had refused to allow him to agitate the plea constituting the capacity in which the assessee was assessed. The Department's appeal was allowed and the assessee's appeal was dismissed by the Tribunal by its consolidated order dated March 17, 1962.
(3.) THE assessee applied to the Tribunal to refer to this Court certain questions of law which were said to arise out of the Tribunal's order dated March 17, 1962. So far as the request for referring the question as to whether the AAC was justified in not admitting the additional ground of objection raised before him is concerned, it was rejected by the Tribunal and no reference was made on that question. The only question of law which was referred to this Court at the assessee's instance is as follows : "Whether, on a true interpretation of the deed of partnership dated November 3, 1956, the aggregate amount of interest of Rs. 5,331 earned by the three minor sons of the assessee was liable to be included in the total income of the assessee under S. 16(3)(a)(ii) of the Act ?" ;