1962 (9) TMI 107 - HC - Income Tax

Inclusion of Minor Daughters' Income in Father's Total Income Upheld Under Indian Income Tax Act

The High Court affirmed the inclusion of minor daughters' income in their father's total income for assessment under section 16(3)(a)(ii) of the Indian ... - Issues:Inclusion of income of minor daughters in father's total income for assessment under section 16(3) of the Indian Income Tax Act, 1922.Analysis:The judgment pertains to a reference by the Income Tax Appellate Tribunal regarding the inclusion of the income of minor daughters in their father's total income for assessment under section 16(3) of the Indian Income Tax Act, 1922. The assessee, who was a partner in a firm along with his minor daughters, contested the inclusion of his daughters' income in his total income, arguing that it was not warranted by section 16(3) of the Act. The Tribunal rejected this contention, leading to the reference to the High Court for resolution.The crux of the issue lies in the interpretation of section 16(3) of the Act, which deals with the inclusion of income of a wife or minor child in an individual's total income for assessment. The specific provision in question is sub-clause (ii) of clause (a), which addresses income arising from the admission of a minor to the benefits of partnership in a firm where the individual is a partner. In this case, the minor daughters were admitted to the benefits of the partnership, not as full-fledged partners, due to their status as minors, as per the Indian Partnership Act, 1932.The department contended that the daughters' income should be added to the total income of their father, the assessee, rather than their respective husbands, as they were minors admitted to the benefits of the partnership. This interpretation was upheld by the High Court, affirming the decision of the department and the Appellate Tribunal. The court highlighted the distinction between being a full partner and being admitted to the benefits of partnership, emphasizing that minors like the daughters cannot be considered full partners under the law.Moreover, the court considered the absence of the phrase 'not being a married daughter' in sub-clause (ii) of clause (a), unlike in sub-clause (iv), and discussed the implications of such omissions in the statutory interpretation. The court also referenced relevant provisions of the Indian Income Tax Act, 1922, and the Indian Partnership Act, 1932, to support its decision in favor of including the daughters' income in the father's total income for assessment.In conclusion, the High Court answered the referred question in the affirmative, ruling that the assessment of the minor daughters' share income in the hands of their father, the assessee, under section 16(3)(a)(ii) of the Income Tax Act was legal. The judgment was delivered without any order as to costs, and a copy of the judgment was directed to be forwarded to the Appellate Tribunal as per statutory requirements.