1978 (3) TMI 12 - HC - Income Tax

Excluded Share of Profit from Total Income under Income Tax Act

The High Court of Allahabad held that the share of profit of the assessee from M/s. Gajadhar Prasad Narain Das cannot be included in his total income for ... Inclusion of income for rate purposes - clubbing of income under s.64(ii) of the I.T. Act, 1961 - inclusion under s.66 limited to income on which no income-tax is payableInclusion of income for rate purposes - clubbing of income under s.64(ii) of the I.T. Act, 1961 - inclusion under s.66 limited to income on which no income-tax is payable - Whether the share of profit of the assessee from M/s. Gajadhar Prasad Narain Das, having been assessed in the hands of his father under s.64(ii), could nonetheless be included in the assessee's total income for rate purposes. - HELD THAT: - The court applied the principle laid down in Arun Kumar Sarraf v. CIT that income may be included in a taxpayer's total income for the purpose of determining the rate of tax only under s.66, and under s.66 only such income can be included as is income on which no income-tax is payable. Where the income of a minor has already been assessed in the hands of the parent under the clubbing provision of s.64(ii), that income is not an item of income on which no tax is payable and therefore cannot be included again in the minor's assessment for rate purposes. Applying that principle to the facts before the court, the Tribunal's inclusion of the assessee's share of profit (already assessed in the father's hands under s.64(ii)) in the assessee's total income for rate purposes was held to be impermissible.Tribunal's view rejected; inclusion for rate purposes disallowed and decision rendered in favour of the assessee.Final Conclusion: The reference is answered against the department and in favour of the assessee: income assessed in the hands of the father under s.64(ii) cannot be included in the minor's total income for rate purposes under s.66, and the assessee is entitled to costs. The High Court of Allahabad held that the share of profit of the assessee from M/s. Gajadhar Prasad Narain Das cannot be included in his total income for rate purposes if it has already been assessed in the hands of his father under s. 64(ii) of the I.T. Act, 1961. This decision is based on a previous ruling and the question was answered in favor of the assessee. The assessee was awarded costs of Rs. 200.