2007 (5) TMI 109

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....ection 64(a) (iii) and 64(1) (iii) in the proceedings in response to notice under section 148 of the Income-tax Act, 1961 ?" 2 Apparently, the second question contains a clerical mistake and the words "section 64(a)(iii)" need to be omitted. 3 Smt. Nisha Rani Agrawal (hereinafter called the assessee) is the assessee in her individual capacity. She had two sons who, during the relevant period, were minors. Their names are Rohit and Rajiv. 4 Rohit was admitted to the benefits of partnership in the following firms to the extent of a share indicated against the name of each firm Name of the firms Share of profits 1. M/s. General Finance Co. 10% 2. M/s. Sheetalaya 12.5% 3. M/s. Ram Narain Bern Prasad 1/8th 5 R....

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....cordingly, section 147(a) was applied, which provision permits reopening of the assessment where income has escaped assessment due to omission of the assessee to make full disclosure. 9 The Tribunal held that the initiation of reassessment under section 147(a) was valid and the income by way of interest, paid to the minors on capital and accumulated profits of the partnership, was covered by section 64(1) (iii). 10 The Bombay High Court has, in the case of CIT v. Chandanmal Kasturchand [1978] 112 ITR 296, held that the interest paid on accumulated profits which remained with the firm could not be included in the total income of the assessee in the context of section 64. 11 The aforesaid decision of the Bombay High Court was conside....