Madhya Pradesh High Court
Chandrakala Bai Naila vs Commissioner Of Income-Tax on 15 February, 1989
Equivalent citations: [1989]178ITR341(MP)
JUDGMENT
G.G. Sohani, Actg. C.J.
1. By this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Jabalpur, has referred the following questions of law to this court for its opinion :
"1. Whether, on the facts and circumstances of the case, the Tribunal was justified in law in holding that the share income Rs. 19,476 in the name of Sanjay Kumar was rightly added in the income of the appellant (mother) ?
2. Whether the Tribunal was justified in law in holding that the provisions of Section 64(1)(iii) were applicable for adding the share income in the name of Sanjay Kumar which was being assessed in the hands of the Hindu undivided family to the total income of the appellant ?"
2. The material facts giving rise to this reference, briefly, are as follows : While computing the income of the assessee for the assessment year 1976-77, the Income-tax Officer included the share income of the minor son of the assessee from the firm, Ganeshlal Gulabchand, in the total income of the assessee, in view of the provisions of Section 64(1)(iii) of the Act. On appeal, the Appellate Assistant Commissioner held that the income falling to the share of the minor son of the assessee was liable to be taxed in the hands of the Hindu undivided family and was not includible in the total income of the assessee. Aggrieved by the order passed by the Appellate Assistant Commissioner, the Revenue preferred an appeal before the Tribunal. The Tribunal held that deletion of the share income of the minor son of the assessee from her total income was not justified in law. In this view of the matter, the Tribunal allowed the appeal. Aggrieved by the order passed by the Tribunal, the assessee sought reference and it is at the instance of the assessee that the aforesaid questions of law have been referred by the Tribunal to this court.
3. Shri Nema, learned counsel for the assessee, contended that the source of investment made in the firm by the minor son was the fund of the Hindu undivided family and hence the provisions of Section 64(1)(iii) of the Act were not attracted. The contention cannot be upheld. What is material for the applicability of Section 64(1)(iii) of the Act is that if the income arising to a minor child of an assessee from a partnership firm is referable to the fact of admission of that child to the benefits of the said partnership firm, then such income is includible in the total income of the assessee. As held by this court in CIT v. Smt. Nirmala Devi [1987] 166 1TR 253, the question of source of investment in the firm by the minor is not relevant or decisive for making the income of the minor includibJe in the total income of the assessee. The Appellate Assistant Commissioner was not right in holding that the minor son of the assessee represented the Hindu undivided family in the partnership firm and that the income of the minor son of the assessee from his admission to the benefits of the partnership was assessable in the hands of the Hindu undivided family.
4. Our answers to the questions referred to this court by the Tribunal are, therefore, in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.