M. S. MENON C.J. - This is a reference by the Income-tax Appellate Tribunal, Madras Bench, under section 66(1) of the Indian-tax Act, 1922. The assessment year concerned is 1958-59 and the accounting period 1132 M. E.
The assessee was one of the partners of a firm consisting of himself, his two minor daughters, Rajeswari and Mayadevi, Balakrishna Reddiar, the husband of Rajeswari, and Tiruvengada Reddiar, the husband of Mayadevi. The contention of the assessee which has been negatived by the Appellate Tribunal is that the department was in error in including the income of Rajeswari and Mayadevi from the from the firm in computing his total income for the purpose of assessment, and that the said inclusion is not warranted by section 16(3) of the Indian Income-tax Act, 1922.
According to the assessee the income of Rajeswari from the firm should have been included in the total income of her husband, Balakrishna Reddiar, and of Mayadevi in the total income of her husband, Tiruvengada Reddiar. Section 16(3) of the Act reds as follows :
'16. (3) In computing the total income of any individual for the purpose of assessment, there shall be included -
(a) so much of the income of a wife or minor child of such individual as arises directly or indirectly -
(i) from the membership of the wife in a firm of which here husband is a partner;
(ii) from the admission of the minor to the benefits of partnership in a firm of which such individual is a partner;
(iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart; or
(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; and
(b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child or both'.
It is evident from sub-clause (i) of clause (a) that the wife contemplated by that sub-clause is a wife capable of being a member of a partnership. Rajeswari and Mayadevi being minors cannot fall within that category. The Indian Partnership Act, 1932, makes it quite clear that in order to become a partner the person concerned must be a major according to the law to which the person is subject, and that a minor can only be admitted to the benefits of a partnership. Sub-section (1) of section 30 of that Act says :
'30. (1) A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partner for the time being, he may be admitted to the benefits of partnership'.
The department has held that the provision applicable is sub-clause (ii) of clause (a), as Rajeswari and Mayadevi cannot be considered as members of the partnership but only as minors admitted to its benefits and added their income from the firm not to the total income their respective husbands but to the total income of their father. We are in agreement with what has been done by the department and affirmed by the Appellate Tribunal.
The words 'not being a married daughter' appear in sub-clause (iv) of clause (a) but not in sub-clause (ii) of clause (a), or clause (b). Sundaram says :
'The omissions do not seem to be intentional but the presence of the words in that part of the sub-section and their absence elsewhere cannot be ignored'. (Sundarams Law of Income-tax in India, 8th edition, page 679).
According to section 2(6B) of the Indian Income-tax Act, 1922, the expressions 'firm', 'partner' and 'partnership' when used in that Act will have - unless there is anything repugnant in the subject or context - 'the same meaning respectively as in the Indian Partnership Act, 1932 (IX) of 1932) : Provided that the expression partner includes any person who being a minor has been admitted to the benefits of partnership'. It is significant that the expression 'partner' is not used in connection with the wife in sub-clause (i) of clause (a). If it had been used, it would have been possible to contend that the proviso is attracted and that the expression 'partner' includes also minor wives like Rajeswari and Mayadevi who have been admitted to the benefits of partnership.
The question referred to this court for decision is :
'Whether the assessment of the share income of the minor married daughters, Rajeswari and Mayadevi, in the hands of their father, the assessee, invoking the provisions of section 16(3) (a) (ii) of the Income-tax Act, is legal ?'
In the light of what is stated above we must answer the question in the affirmative and against the assessee. We do so, but in the circumstances of the case without any order as to costs.
A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Appellate Tribunal as required by sub-section (5) of section 66 of the Indian Income-tax Act, 1922.
Question answered in the affirmative.