Minor child income clubbing turns on the version of section 64 in force for the relevant assessment year.

Clubbing of a minor child's income under section 64(1)(ii) depends on the version of the provision in force for the relevant assessment year. For 1975-76, the unamended section applied, and the child's firm income could be included in the parent's hands only if the parent was also a partner; that condition was not met, so the income was not assessable in the father's hands. For 1976-77, the amended provision effective from 1 April 1976 governed, and the parent's partnership status was no longer required for clubbing. The reference was answered for the assessee for 1975-76 and against the assessee for 1976-77.

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Issues: Whether the income of the assessee's minor children from a partnership firm could be included in the assessee's hands under section 64(1)(ii) of the Income-tax Act, 1961 for the assessment years 1975-76 and 1976-77.

Analysis: For the assessment year 1975-76, the unamended version of section 64 applied. Under that provision, the minor's income from a firm could be clubbed with the parent's income only if the parent was also a partner of the firm. Since that condition was not satisfied, the income could not be assessed in the hands of the father for that year. For the assessment year 1976-77, section 64 as amended with effect from 1 April 1976 governed the field. Under the amended provision, it was no longer necessary that the parent should also be a partner for the minor's income from the firm to be included in the parent's hands.

Conclusion: The reference was answered in favour of the assessee for the assessment year 1975-76 and against the assessee for the assessment year 1976-77.

Final Conclusion: The decision sustains exclusion of the minor children's income from the father's assessment for one year and permits clubbing for the succeeding year under the amended law.

Ratio Decidendi: The applicability of clubbing of a minor child's income under section 64 depends on the version of the provision in force for the relevant assessment year, and the amended requirement governs only from its effective date.

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