COMMISSIONER OF INCOME TAX V. DHANESH R BHOW,

ITR/160/1993

AI Insights

The case revolves around the interpretation of Section 64(1)(i) of the Income-tax Act, 1961, concerning the inclusion of a spouse's income from a partnership firm into the income of the assessee. The assessee, Dhanesh R Bhow, was a partner in M/s Bidhan Advertising and Marketing Company representing his Hindu Undivided Family (HUF), while his wife, Smt. Rakshaben, was also a partner in the same firm. The revenue contended that the income of Smt. Rakshaben should be included in the income of the assessee under Section 64(1)(i). However, both the Appellate Assistant Commissioner and the Tribunal, referencing a prior decision by the High Court in Dinubhai Ishwarlal Patel vs ITO, ruled against this inclusion. The High Court's decision was subsequently upheld by the Supreme Court in CIT vs. Shri Om Prakash & Ors.

• Counselvise Citation: [2001] 140 COUNSELVISE.COM (IT) 718357 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 17-10-2001
• Assessment Year: misc
• Other Referred Cases: Dinubhai Ishwarlal Patel vs ITO, CIT vs. Shri Om Prakash & Ors.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: AKIL KURESHI; MANISH BHATT
• Keywords: Appellate Tribunal; Assessment years; Income inclusion; Income Tax; Partnership firm; Spouse Income
• Section: 64(1)(i)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 160 of 1993 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus DHANESH R BHOW, -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 160 of 1993 MR AKIL KURESHI with MR MANISH R BHATT for Petitioner SERVED BY RPAD - (N) for Respondent -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA Date of decision: 17/10/2001 ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) In this reference at the instance of the revenue, the following question has been referred for the opinion of this Court in respect of assessment years 1979-80, 1982-83 and 1983-84 :- \"Whether, the Appellate Tribunal is right in law and on facts in holding that the income of Smt. Rakshaben, the wife of the assessee, who was a partner in the firm of M/s Bidhan Advertising and Marketing Company, Ahmedabad wherein the assessee is also a partner representing his HUF, cannot be added in the income of the assessee u/s. 64(1)(i) of the I.T. Act ?\" 2. We have heard Mr Akil Kureshi, learned counsel for the revenue. Though served, none appears for the respondent-assessee. 3. The assessee in this case is an individual deriving share of profit from various partnership firms, Director fees and interest income. The wife of the assessee Mrs Rakshaben is a partner in the firm styled as M/s Bidhan Advertising and Marketing Company wherein the assessee represents the HUF as a partner in the representative capacity. On the basis of these facts, the Assessing Officer applied the provisions of Section 64(1)(i) of the Income-tax Act, 1961 and proceeded to add the income of Mrs Rakshaben in the hands of the assessee. The Appellate Assistant Commissioner allowed the assessee's appeal and the Tribunal confirmed the said appellate order following the decision of this Court in Dinubhai Ishwarlal Patel vs ITO, 118 ITR 122. 4. The relevant provision of Section 64(1)(i) applicable to the relevant assessment year under consideration in this reference provided that in computing the total income of any individual, there shall be included all such income as arises directly or indirectly 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. In the facts of the instant case, the assessee was not a partner in the aforesaid firm called M/s Bidhan Advertising and Marketing Company in his capacity as an individual but the assessee was representing the HUF as a partner in the representative capacity and, therefore, the aforesaid provisions of Section 64(1)(i) were not applicable. The view taken by this Court in the case of Dinubhai Ishwarlal (Supra) also came to be approved by the Apex Court in CIT vs. Shri Om Prakash & Ors., (1996) 217 ITR 785. 5. In view of the aforesaid statutory provision and the aforesaid decision of the Apex Court, we answer the question referred to us in the affirmative i.e. in favour of the assessee and against the revenue. 6. The reference accordingly stands disposed of with no order as to costs. (M.S. Shah, J.) (D.A. Mehta, J.) sundar/- "