Clubbing of transferred income under section 64(v) prevails over representative assessment machinery, even if minors were assessed separately.

Section 64(v) operates as a substantive clubbing provision, treating income from transferred assets as the transferor's income where it is for the immediate or deferred benefit of a spouse or minor children. Section 161(2) is only a machinery rule for representative assessment and recovery, so it does not displace the charging effect of section 64(v). The note also states that assessments made on minor beneficiaries do not bar inclusion of the same trust income in the transferor's assessment; any erroneous beneficiary assessments may be separately annulled, but they do not affect the transferor's substantive liability.

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Issues: (i) Whether section 64(v) of the Income-tax Act, 1961 applied to the assessee's case for assessment year 1962-63 notwithstanding section 161(2); (ii) Whether the assessments on the minor beneficiaries barred inclusion of the trust income in the assessee's assessment under section 64(v).

Issue (i): Whether section 64(v) of the Income-tax Act, 1961 applied to the assessee's case for assessment year 1962-63 notwithstanding section 161(2).

Analysis: The provision governing clubbing of income under section 64(v) treated income from transferred assets as the transferor's income to the extent it was for the immediate or deferred benefit of spouse or minor children. Section 161 was held to be only an enabling machinery provision dealing with representative assessment and recovery, and sub-section (2) merely clarified that a person assessable as representative assessee could not be assessed again under another provision in respect of the same income. That clarification did not displace the substantive charging effect of section 64(v). The earlier view under the 1922 Act was understood consistently with this scheme, because the special clubbing provision operated on a different plane from the machinery provision.

Conclusion: Section 64(v) was rightly applied to the assessee's case, and section 161(2) did not make it inapplicable.

Issue (ii): Whether the assessments on the minor beneficiaries barred inclusion of the trust income in the assessee's assessment under section 64(v).

Analysis: Once the income was liable to be assessed as the assessee's own income under section 64(v), it could not simultaneously be assessed in the hands of the beneficiaries. The completed assessments on the minors were therefore erroneous, but their illegality did not create a legal bar against assessment of the same income in the hands of the assessee. Any such wrongful assessments could be annulled separately, and that circumstance did not affect the substantive liability of the assessee.

Conclusion: The assessments on the minor beneficiaries did not bar application of section 64(v) to the assessee.

Final Conclusion: The trust income was assessable in the assessee's hands under the clubbing provision, and the contrary assessments on the minors did not defeat that liability.

Ratio Decidendi: A machinery provision for representative assessment cannot override a substantive provision that clubs transferred income in the hands of the transferor, and an erroneous assessment of the same income in the hands of beneficiaries does not bar assessment of that income in the transferor's hands.

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