Minor's business income through guardian taxed as business income, not unearned income, because representation preserves legal character.

Income from a business owned by minors and carried on through their guardian retained its character as business income, because the guardian acted only as a representative and not on his own behalf. Section 40 recognised assessment and recovery in respect of a minor's income through the guardian, supporting the view that the business was still carried on by the minors in law. The income was therefore assessable under section 10 as business income and not under section 12 as unearned income.

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Issues: Whether the income from a business carried on in the names of minors through their guardian was assessable under section 12 of the Income-tax Act, 1922 as unearned income, or under section 10 as business income.

Analysis: The business belonged to the minors, and their minority prevented them from carrying it on personally. In such a case, the law permits the business to be carried on through a representative such as a guardian. The guardian does not conduct the business on his own behalf but only represents the minors. Section 40 recognises this position by providing for assessment and recovery in respect of a minor's income through the guardian. On that basis, the income retains its character as income derived from business carried on by the minors, though through representation.

Conclusion: The income was assessable as business income under section 10 and not as unearned income under section 12. The questions were answered in favour of the assessee.

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