Court excludes deceased's wife's share, includes minor children's share in total income under Income-tax Act, 1961.

The court held that the share of profits allocated to the deceased assessee's wife up to a certain date should not be included in the total income, as the marital relationship had ceased to exist. However, the shares of profits allocated to the deceased assessee's minor children were deemed liable to be included in the total income. The court made this determination based on the provisions of the Income-tax Act, 1961. The court did not order costs due to the unique circumstances of the case.

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Issues Involved:
1. Inclusion of the share of profits of the deceased assessee's wife in the total income of the assessee.
2. Inclusion of the share of profits of the deceased assessee's minor children in the total income of the assessee.

Detailed Analysis:

1. Inclusion of the Share of Profits of the Deceased Assessee's Wife:

The primary issue was whether the sum of Rs. 13,600, which included the share of profits allocated to the wife and minor children of the deceased assessee up to July 1, 1963, should be included in the assessee's total income for the assessment year 1964-65.

The court examined the provisions of section 64 of the Income-tax Act, 1961, which replaced section 16(3) of the Indian Income-tax Act, 1922. The court noted that the income must arise directly or indirectly to the spouse for it to be included in the total income of the individual. The court referred to the Supreme Court's decision in Philip John Plasket Thomas v. Commissioner of Income-tax, which held that the relationship of husband and wife must subsist at the time of the accrual of the income for it to be included in the husband's total income.

In this case, the death of the deceased assessee on July 1, 1963, dissolved the partnership firms by operation of law, and the marital relationship between the deceased and his wife ceased to exist. The court held that the marital relationship did not subsist at the time when the right to receive the profits accrued to the wife, Lilavati. Therefore, the share of profits allocated to Lilavati up to July 1, 1963, was not liable to be included in the total income of the deceased assessee.

2. Inclusion of the Share of Profits of the Deceased Assessee's Minor Children:

Regarding the shares of profits allocated to the minor children, the court referred to section 64(1)(ii) of the Income-tax Act, 1961, which includes the income arising to a minor child from the admission to the benefits of partnership in a firm where the individual is a partner.

The court observed that the relationship between the deceased and his minor children did not cease upon his death. The right of the minor children to receive their share of profits did not arise due to an event that rendered them non-children of the deceased. Therefore, the shares of profits allocated to the minor children, Kirankumar and Sanjaykumar, for the period up to July 1, 1963, were liable to be included in the total income of the deceased assessee.

Conclusion:

The court concluded that out of the amount of Rs. 13,600, the share of profits allocated to the widow, Lilavati, up to July 1, 1963, was not liable to be included in the total income of the deceased assessee. However, the shares of profits allocated to the minor sons, Kirankumar and Sanjaykumar, for the period up to July 1, 1963, were liable to be included in the total income of the deceased assessee for the assessment year 1964-65. There was no order as to costs due to the peculiar facts of the case.

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