COMMISSIONER OF INCOME TAX MADRAS Vs. S A S MARIMUTHU NADAR

JUDGEMENT

(1.) These are two appeals against the judgment of the Madras High Court dated August 28, 1956, by which a composite question embracing two assessment years, referred by the Income-tax Appellate Tribunal (Madras Bench, 'B') was answered against the Department. The question, which was referred to the High Court was as follows:

(2.) The respondent, S. A. S. Marimuthu Nadar, was the manager of a Hindu undivided family. The family consisted of Marimuthu Nadar, his two major sons and two minor sons. On August 16, 1946, the family divided, and a firm came into existence. Marimuthu Nadar and his two major sons took 4/16th share each and the two minor sons were admitted to the benefits of partnership to the extent of 2/16th share each. For the assessment year, 1949-50 (the previous year ended on August 16, 1948) the share of profits of Marimuthu Nadar from the partnership was Rs. 9,812, while the share of profits of his two minor sons was Rs. 8,124 and Rs. 8,381. The income of the minors was added to the total income of Marimuthu Nadar under S. 16 (3) (a) (ii) of the Income-tax Act. Marimuthu Nadar was granted earned income relief only to the extent of his own individual share of the profits from the partnership. In the assessment year, 1950-51, the elder of the two minor sons had become major, and it was only the share of the remaining minor son which was included in the total income of Marimuthu Nadar. In that year also, he was given earned income relief only on his share of the profits but not on the share of the profits of the minor son, which was included in his total income. Marimuthu Nadar's share of profits was Rs. 12,344 and that of his minor son, Rs. 10,143.

(3.) Marimuthu Nadar appealed to the Appellate Assistant Commissioner and also to the Appellate Tribunal; but his appeals were unsuccessful. At the instance of Marimuthu Nadar, the Tribunal referred the above question to the High Court for its decision. The High Court answered the question in the affirmative and in favour of the assessee. The Commissioner of Income-tax, Madras, has, therefore, appealed with a certificate under S. 66A (2) of the Indian Income-tax Act.