1983 (10) TMI 50 - HC - Income Tax

Court Upholds Inclusion of Minor Sons' Share Income in Assessee's Total Income

The Full Bench ruled in favor of the Revenue, upholding the inclusion of minor sons' share income in the assessee's total income under section 64(ii) of ... Inclusions In Total Income, Total Income Issues Involved:1. Inclusion of minor sons' share income in the assessee's total income u/s 64(ii) of the Income-tax Act, 1961.2. Interpretation of the term 'individual' in the context of s. 64(ii) and its applicability to a karta of an HUF.3. Reconsideration of the precedent set by Madho Prasad v. CIT [1978] 112 ITR 492 (All).Summary:Issue 1: Inclusion of Minor Sons' Share IncomeThe primary question referred was whether the Tribunal was right in law in holding that the share income of the assessee's minor sons from the firm, M/s. Arvind Cold Storage, was rightly included u/s 64(ii) of the Income-tax Act, 1961, as the income of the assessee. The assessee, Sahu Govind Prasad, contested the inclusion of his minor sons' share income from the firm in his total income. The Income Tax Officer (ITO) had included this income, and the Tribunal upheld this decision, following the precedent set in Madho Prasad v. CIT [1978] 112 ITR 492 (All).Issue 2: Interpretation of 'Individual'The court examined whether the term 'individual' in s. 64(ii) includes a karta of an HUF. The assessee argued that the Supreme Court's decision in CIT v. Sodra Devi [1957] 32 ITR 615, which excluded minor children's income from being included in the mother's income, should apply. However, the court noted that the word 'individual' in s. 64(ii) is used in a restricted sense, referring to a human being capable of having a wife or minor child, and not a group or corporation. The court found that the decision in Madho Prasad's case required reconsideration as it did not consider the Sodra Devi case and the Explanation to sub-section (1) of s. 64.Issue 3: Reconsideration of Madho Prasad v. CITThe Division Bench noted that other High Courts, including Andhra Pradesh, Gujarat, and Punjab & Haryana, had dissented from the decision in Madho Prasad's case. The court observed that the Supreme Court had dismissed the Special Leave Petition against the Andhra Pradesh High Court's decision in CIT v. Sanka Sankaraiah [1978] 113 ITR 313. The Full Bench ultimately upheld the view in Madho Prasad's case, stating that the phrase 'in which such individual is a partner' includes a human being who may be the karta of an HUF. The court concluded that the share income of the minor sons of the assessee from the firm was rightly included in the assessee's income u/s 64(ii).Final Judgment:The Full Bench answered the question in the affirmative, in favor of the Revenue and against the assessee, thereby upholding the inclusion of the minor sons' share income in the assessee's total income. The Commissioner was entitled to costs assessed at Rs. 200.