1987 (4) TMI 97 - AT - Income Tax

Income from Transferred Assets Included in Total Income Upheld

The Tribunal upheld the inclusion of income from assets transferred to the spouse and minor child of a non-resident individual in the assessee's total ... Minor Child, Total Income Issues:- Inclusion of income arising from assets transferred to spouse and minor child of a non-resident individual in the total income under section 64(1) of the Income-tax Act, 1961.Analysis:The judgment by the Appellate Tribunal ITAT BOMBAY-B dealt with three appeals concerning the assessment years 1980-81, 1981-82, and 1982-83 filed by a non-resident individual against the orders of the Appellate Assistant Commissioner of Income-tax, B-Range, Bombay. The central issue in all three appeals was the inclusion of income arising from assets transferred to the assessee's wife and minor son in the assessee's total income under section 64(1) of the Income-tax Act, 1961. The Income-tax Officer had included the income of the wife and minor son in the assessee's total income, which was upheld by the Appellate Assistant Commissioner, leading to the appeals before the Tribunal.The assessee contended that the provisions of section 64(1) should be read in conjunction with section 1(2) of the Income-tax Act, 1961, arguing that transfers between non-residents outside India should not attract the provisions of section 64(1). The assessee's counsel emphasized that the gifts were made in Dubai, and the mere remittance of funds to India for investment should not trigger the application of section 64(1). The counsel vehemently argued that the income arising to the wife and minor son should not have been included in the assessee's total income.On the contrary, the departmental representative argued that even if the assessee was a non-resident, income arising to the wife or minor child from transferred assets would fall under section 64(1). The representative highlighted that the scope of total income includes all income received in India, regardless of the residence status of the assessee or the recipients. It was asserted that the income from assets transferred to the wife and minor son accrued or arose in India, justifying its inclusion in the assessee's total income.The Tribunal referred to relevant judicial precedents emphasizing the need to interpret taxing statutes based on the language used without implying additional conditions. The Tribunal noted that the clear language of section 64(1) mandates the inclusion of income arising from assets transferred to the spouse and minor child, without any distinction based on the location of the transfer or the residence status of the individuals involved. Therefore, the Tribunal upheld the inclusion of income from assets transferred to the wife and minor son in the assessee's total income for all relevant assessment years. The Tribunal concluded that the orders of the revenue authorities were justified, leading to the dismissal of the appeals.In conclusion, the Tribunal's judgment affirmed the inclusion of income arising from assets transferred to the spouse and minor child of a non-resident individual in the assessee's total income under section 64(1) of the Income-tax Act, 1961, based on a strict interpretation of the statutory provisions and relevant legal principles.