2. The assessee is the mother of Shri Sanjay Kumar, who has been admitted to the benefits of a partnership firm Ganeshlal Gulabchand.
During the relevant accounting year, the share of this minor came to Rs. 19,476 which the ITO added in the income of the assessee.
3. On appeal, it was argued before the AAC that in the first instance Shri Bajranglal, father of the minor, was a partner in his capacity as the karta of the HUF. He died on 5-12-1965 and his son Sanjay Kumar, who stepped into the shoes of his deceased father, was admitted to the benefits of the partnership. Thereafter, the share income in the hands of the firm was offered for taxation in the hands of the HUF, which consisted of Sanjay Kumar and Ajay Kumar, minor sons of the deceased, and Chandrakalabai, the present assessee and the wife of the deceased.
Assessments had been on the HUF in the name of Sanjay Kumar Bajranglal and the share income from the said firm had already been assessed in its hands up to the present assessment year. Therefore, the said share income had been wrongly included in the hands of the present assessee, because it did not belong to Sanjay Kumar in its individual capacity, but in his representative capacity as the karta of the HUF. Reference was made to the following decisions of the Hon'ble Supreme CourtCIT v.Kalu Babu LaL Chand  37 ITR 1.23 and Tolaram Bijoy Kumar v.CIT 112 ITR 750. The AAC was of the opinion that since Shri Bajranglal was a partner of the firm Ganeshlal Gulabchand by virtue of capital received on partition of the HUF, the ITO was not justified in including the share income in the said firm in the assessment of the present assessee. He, therefore, deleted the same. The revenue has come up in second appeal before us.
4. We have heard the representatives of the parties at length in this appeal. The reasoning adopted by the AAC has been reiterated by the representative of the assessee and besides the two authorities, referred to above, reference has also been made to a decision of the Hon'ble Supreme Court in V.D. Dhanwatey v. CIT  68 ITR 365. All these authorities lay down the proposition that if the karta of a HUF becomes a partner of a firm and the contribution of the capital to the firm belongs to the family, the share of profits and other income earned by the karta from the firm should be treated to be the income of the HUF and assessable in its hands. This proposition of law cannot be seriously disputed but before the same can be invoked, it has to be shown that the karta of the family was a partner of the firm in his capacity as such. Here, in the present case, Bajranglal, husband of the assessee, had expired on 5-12-1965. Sanjay Kumar, the son of the assessee, was a minor at the time of the relevant assessment. The partnership deed, dated 1-1-1966, showed that Sanjay Kumar never became a partner of the firm. He was only admitted to the benefits of the partnership and was absolved from the liabilities for any losses. In fact, he being a minor was incompetent to contract and, therefore, could not become a member either in his individual capacity or in his capacity as karta of the HUF. Before a person can be a partner, he is to have a capacity to contract, while Sanjay Kumar had none. According toSection 30 of the Indian Partnership Act, 1932, a person who is a minor according to the law to which he is subject may not be a partner in a firm. Such a minor is not personally liable for the acts of the firm. He cannot sue the partners for an account or payment of his share of the property or profits of the firm and it is only the other partners who may elect to dissolve the firm. The case of such a minor would squarely fall under clause (iii) of Section 64(1) of the Income-tax Act, 1961, according to which, in computing the total income of any individual, there shall be included all such income as arises directly or indirectly to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm. If anybody has to be a partner of the firm in his capacity as the karta of the HUF, it would be the major member of the family, who would be nobody else than the assessee herself, inasmuch as the family is said to have consisted of only the assessee and her two minor sons. In these circumstances, we fail to see as to how the assessee can get out of the provisions of Section 64(1)(iii) by merely saying that instead of her being a partner, the minor shall be deemed to be a partner in his capacity as the karta of the HUF, because a karta has to act on behalf of the family and his actions necessarily involve entry into contracts, which the minor legally cannot do. Considering all this position of law, we are of the opinion that the deletion of the share income of profits on the assessment of the present assessee by the AAC was not justified in law.
5. We, accordingly, accept the appeal, quash the order of the AAC and restore that of the ITO.