1963 (9) TMI 53 - SC - Income Tax

Supreme Court Upholds Exclusion of Minor Children's Income in Individual Capacity

The Supreme Court dismissed appeals regarding the inclusion of minor children's income in the assessee's individual capacity under section 64(1)(ii) of ... - Issues:1. Whether the income of minor children of the assessee in a partnership-firm should be included in the assessee's individual capacity under section 64(1)(ii) of the Income-tax Act, 1961Rs.Analysis:The Supreme Court heard appeals arising from the Punjab and Haryana High Court's judgment on the inclusion of income of minor children in the assessee's individual capacity under section 64(1)(ii) of the Income-tax Act, 1961 for the assessment years 1973-74 and 1974-75. The assessee, a partner in a partnership-firm as the karta of a Hindu undivided family, objected to the Income-tax Officer's attempt to include the minor children's income in his. The Tribunal sided with the assessee, leading the Revenue to seek a reference under section 256(1), which was rejected. The High Court also denied the request, citing precedents from the Andhra Pradesh High Court and its own decisions. The Supreme Court referred to the decision in L. Hirday Narain v. ITO, which concluded that income of minors from a partnership-firm cannot be included in the father's income assessed as a Hindu undivided family. Given the conflicting High Court opinions and the unaltered law since 1976, the Supreme Court dismissed the appeals, upholding the decision in L. Hirday Narain. No costs were awarded.In another appeal under section 64(1)(i), the Supreme Court dismissed the case following the same reasoning as in the previous appeals. Similarly, in an appeal under section 64(1)(ii) for the assessment years 1965-66 to 1967-68, where the father was a partner in the partnership-firm as the karta of the Hindu undivided family, the income of minors could not be included in the father's income. These appeals were also dismissed with no costs.Additionally, a matter under section 64(1)(i) for the assessment years 1973-74 and 1975-76 found that the husband was a partner in the partnership-firm as the karta of the Hindu undivided family. Consistent with previous decisions, these appeals were dismissed without costs. Another appeal was listed for orders on a later date. The Supreme Court maintained a consistent stance across these appeals, emphasizing the principle that income of minors from a partnership-firm cannot be included in the father's income assessed as a Hindu undivided family, based on the decision in L. Hirday Narain v. ITO and the lack of compelling reasons to deviate from that precedent.