1979 (9) TMI 28 - HC - Income Tax

Clarification on Total Income vs. Gross Total Income under Income Tax Act

The High Court of Jammu and Kashmir clarified that the total income of an owner includes income of a minor child assessable under section 64 of the Income ... Inclusion of clubbed income under section 64 in the 'total income' for the proviso to section 23(2) - Computation of 'total income' as 'total amount of income referred to in section 5 computed in the manner laid down in this Act' - Distinction between 'total income' under section 5/section 2(45) and 'gross total income' as defined in section 80B(5)Inclusion of clubbed income under section 64 in the 'total income' for the proviso to section 23(2) - The proviso to section 23(2) - reference to 'total income of the owner' - includes income clubbed in the assessee's hands under section 64. - HELD THAT: - The Court held that 'total income' must be read as defined in section 2(45) - the total amount of income referred to in section 5 computed in the manner laid down in the Act. The computation language imports other provisions of the Act which deem certain incomes to be that of the assessee, specifically including incomes brought into the assessee's hands by operation of section 64. The proviso to section 23(2) carves out only the exclusion of the property income itself and deductions under Chapter VIA; it does not exclude incomes included under section 64. Hence, where income of a minor is clubbed in the assessee's total income under section 64, that income is to be taken into account for applying the ten per cent. ceiling in the proviso to section 23(2).Answered in the affirmative: the 'total income of the owner' in the proviso to section 23(2) includes income assessable in his hands under section 64.Distinction between 'total income' under section 5/section 2(45) and 'gross total income' as defined in section 80B(5) - Whether 'total income' under section 5 is equivalent to 'gross total income' as defined in section 80B(5). - HELD THAT: - The Court observed that the Tribunal's reliance on the pre-amendment definition in section 80B(5) to equate 'total income' with 'gross total income' was erroneous. The statutory definitions and the scheme of computation show the concepts are distinct: 'total income' under section 5/section 2(45) is the amount computed in the manner laid down in the Act (including incomes deemed by other provisions such as section 64), whereas 'gross total income' (as defined in section 80B(5)) was a separate, differently framed concept. Consequently, the two are not interchangeable.Answered in the negative: 'total income' under section 5/section 2(45) is not the same as 'gross total income' under section 80B(5).Final Conclusion: Question No.1 answered in the affirmative (clubbed income under section 64 is included in 'total income' for the proviso to section 23(2)); Question No.2 answered in the negative (no equivalence between 'total income' under section 5/section 2(45) and 'gross total income' under section 80B(5)). Parties to bear their own costs. Issues involved: Interpretation of provisions related to total income under section 23(2) and section 5 of the Income Tax Act, 1961.Summary:The High Court of Jammu and Kashmir addressed the issue of whether the total income of the owner under the proviso to section 23(2) includes income under section 64 of the Income Tax Act, 1961. The Court analyzed the definitions of 'total income' and 'gross total income' as per the Act. It was concluded that the total income of an owner would indeed include income of his minor child assessable under section 64. However, the Court clarified that 'total income' and 'gross total income' are not interchangeable, and the concept of each is distinct. Therefore, the Court answered the first question in the affirmative and the second question in the negative, stating that total income under section 5 is not equivalent to gross total income as defined in section 80B(5).In conclusion, the Court upheld the Tribunal's decision regarding the inclusion of income under section 64 in the total income of the owner but disagreed with the notion that total income is the same as gross total income. The parties were directed to bear their own costs, and the counsel's fee was assessed at Rs. 150.This judgment clarifies the scope of total income under the Income Tax Act, emphasizing the inclusion of income under section 64 in the total income of an owner while distinguishing it from gross total income as defined in the Act.