Published on: January 14, 2024 at 11:00 IST
Court: Supreme Court of India
Citation: CIT V. Om Prakash (1995)
Honourable Supreme Court of India has held that an individual can be a partner in a partnership firm in his individual capacity or in the capacity of the karta of a Hindu Undivided Family (HUF). It is held that Partnership Firm are not concerned in what capacity a particular person is a partner, i.e., whether as an individual, as a karta, as a trustee or otherwise. To wit, where a person is a partner as the karta of a Hindu Undivided Family (HUF), the capacity in which he is a partner in the partnership firm is relevant as between him and the other members of the Hindu Undivided Family (HUF).. It is held that the income the karta receives as a partner is not his individual income but the income of the HUF which a person receives it on behalf of the Hindu Undivided Family (HUF).
20. For the above reasons, we hold that where a person is a partner in a partnership firm not in his individual capacity but as the karta of the HUF, neither the income accruing to his wife on account of her being a partner in the same partnership firm nor the income accruing to his minor children on account of their being admitted to the benefits of such partnership firm, can be included in the total income of such person — neither in his individual assessment nor in the assessment of the HUF. Our holding is confined to the above situation alone.
Drafted By Abhijit Mishra