Clubbing of minor's partnership income applies after amendment even where the parent has no independent income.

Minor sons' share income from admission to the benefits of partnership was not includible in the assessee's individual assessment for the pre-amendment years 1974-75 and 1975-76, because section 64(1)(iii) as then in force did not cover that position. After the 1976 amendment, the same income became includible in the parent's total income for 1977-78, and this clubbing applied even though the parent had no independent income. The amended statutory scheme therefore overrides the absence of the parent's own income, while the earlier years remain governed by the unamended provision.

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Issues: (i) Whether the minor sons' share income from admission to the benefits of partnership could be included in the assessee's individual assessment under section 64(1)(iii) of the Income-tax Act, 1961 for the assessment years 1974-75, 1975-76 and 1977-78. (ii) Whether section 64(1) could not be invoked to include the minors' income merely because the parent had no income of his own as an individual.

Issue (i): Whether the minor sons' share income from admission to the benefits of partnership could be included in the assessee's individual assessment under section 64(1)(iii) of the Income-tax Act, 1961 for the assessment years 1974-75, 1975-76 and 1977-78.

Analysis: For the assessment years 1974-75 and 1975-76, the controversy arose prior to the amendment to section 64 by the Taxation Laws (Amendment) Act, 1975 with effect from 1 April 1976. The pre-amendment position did not permit inclusion of the minor sons' income in the assessee's individual assessment. For the assessment year 1977-78, the amended provision applied, and the income arising to the minor sons on admission to the benefits of partnership was includible in the assessee's total income notwithstanding that the assessee had no income from any source.

Conclusion: The question was answered against the Department for the assessment years 1974-75 and 1975-76, and in favour of the Department for the assessment year 1977-78.

Issue (ii): Whether section 64(1) could not be invoked to include the minors' income merely because the parent had no income of his own as an individual.

Analysis: The amended clubbing provision governed the later assessment year, and the absence of independent income in the hands of the parent did not prevent inclusion of the minors' share income in the parent's total income. The Tribunal's contrary view was inconsistent with the amended statutory scheme.

Conclusion: The question was answered in favour of the Department.

Final Conclusion: The reference was answered partly against the Department for the pre-amendment assessment years and in its favour for the post-amendment assessment year, with the Tribunal's view on the effect of the parent having no own income rejected.

Ratio Decidendi: After the 1976 amendment, a minor's share income from admission to the benefits of a partnership is includible in the parent's total income under section 64(1)(iii) even if the parent has no income of his own; prior to the amendment, the position was otherwise for the relevant assessment years.

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