Clubbing of minors' interest income in partnership capital accounts upheld under the Income-tax Act.

Interest credited to the capital accounts of minors admitted to the benefits of partnership was treated as income falling within section 64(1)(iii), because the amounts were not accepted as mere deposits outside the clubbing provision. On that footing, the minors' interest income was includible in the assessee's total income, and the Revenue's position was upheld.

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Issues: Whether interest credited to the capital accounts of minors admitted to the benefits of partnership was includible in the assessee's total income under section 64(1)(iii) of the Income-tax Act, 1961.

Analysis: The minors had received interest on amounts standing to their capital accounts in the partnership. The contention that the amounts were merely the minors' deposits and therefore outside the clubbing provision was rejected. The provision in section 64(1)(iii) was applied on the footing that the minors' interest income fell within the statutory language governing inclusion in the parent's total income.

Conclusion: The interest income was rightly included in the assessee's total income, and the question was answered against the assessee and in favour of the Revenue.

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