Income from assets transferred to minor children is attributable to the parent when credits are transfers, not partition.

Whether credits to minor children constituted transfers under income-attribution law or represented a partition of joint family property is the central issue. The analysis applies the principle that partition requires prior joint-family proprietary character; mere allotment of a sole owner's separate property does not effect partition absent clear declaration or conduct assimilating the property into joint stock. Because the deed disclaimed family interest and no cogent evidence showed joint-family character, the credits were treated as transfers/gifts of separate property, attracting attribution of minors' interest income to the assessee.

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Issues: Whether the Tribunal was justified in applying section 16(3)(a)(iv) of the Income-tax Act and adding to the assessee's income the interest earned on amounts credited to his minor children, i.e., whether the credits constituted a transfer of assets to minors (not being married daughters) within the meaning of section 16(3)(a)(iv) or were the result of a partition of joint family property.

Analysis: Section 16(3)(a)(iv) applies where income arises directly or indirectly from assets transferred to a minor child by the individual otherwise than for adequate consideration. The factual matrix shows a deed dated 8.12.1955 declaring the business as the assessee's separate self-acquired property and account entries on 31.12.1955 crediting specified sums to wife, sons and daughters. A partition under Hindu law presupposes that the subject matter was joint family property and constitutes ascertainment of pre-existing proprietary rights; mere distribution of a sole owner's separate property by allotment does not amount to a partition unless there is cogent evidence that the separate property was impressed with joint family character (for example by clear, unequivocal declaration or conduct amounting to blending into common stock). The deed explicitly disclaimed any family interest in the business, no formal or unequivocal act converting the business into joint family property is shown, and the credits to family members are consistent with transfers or gifts of the assessee's separate property rather than a partition of joint family assets. Accordingly, the credits operated as transfers of assets to minors within the mischief of section 16(3)(a)(iv).

Conclusion: Issue answered against the assessee; the Tribunal was justified in applying section 16(3)(a)(iv) and in adding the interest income of the minor children to the assessee's assessable income.

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