Minor's partnership income remained taxable in the parent's assessment despite a later change in firm constitution.

A minor's share of profits from admission to the benefits of a partnership was includible in the individual assessee's total income under section 16(3) of the Indian Income-tax Act, 1922 because the relevant test was the minor's status during the previous year, not the date of assessment. Since the minor remained a minor throughout that year, inclusion was required. On the firm's constitution, section 26(1) turned on the position when the firm's assessment was completed; because the firm had already been assessed before the minor attained majority, the later change did not affect the completed assessment. The Revenue's view was upheld on both issues.

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Issues: Whether the share of profits arising to a minor admitted to the benefits of a partnership was includible in the total income of the assessee for the relevant previous year, and whether a later change in the constitution of the firm affected that inclusion.

Analysis: Under Section 16(3) of the Indian Income-tax Act, 1922, the income of a minor child arising directly or indirectly from admission to the benefits of partnership is to be included in computing the total income of the individual concerned for the relevant previous year. The decisive period is the previous year, not the date on which the assessment is completed. Since the minor remained a minor throughout the previous year relevant to the first reference, the share of profits had to be included in the assessee's assessment. As to Section 26(1), the material time for determining whether there had been a change in the constitution of the firm was the time when the firm's assessment was completed. The firm had already been assessed before the minor attained majority, so the later change did not affect the completed assessment.

Conclusion: The share of the minor's profits was rightly included in the assessee's total income, and the alleged later change in the constitution of the firm did not displace that result. The answers were in favour of the Revenue on all questions referred.

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