2019 (5) TMI 113

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.... Assessment Years 2003-2004 to 2008-2009. 2. The Substantial Questions of Law, on which these Appeals were admitted by a Co-ordinate Bench of this Court on 06.02.2012, are quoted below for ready reference : ''(1) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the minor's income cannot be taxed at all if both the parents are not alive ? (2) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the income of the minor will be completely exempt from tax if both the parents are not alive ? (3) Whether on the facts and in the circumstances of the case, the Income Tax Ap....

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....ven the Tribunal, which dealt with this case. 32. The clubbing provisions in Section 64(1A) of the Act cannot be said to be charging provisions and they were enacted as an anti-evasive measure to plug the loopholes in the taxation of the income of Minors, which was found to be used by parents, but not taxed and also to avoid diversion of parents' income to the Minor by way of gifts or otherwise and then out of that corpus of funds, income of interest etc., arising out of the hands of the Minors, not being brought to tax and, therefore, the clubbing provisions were introduced in Sub-section (1A) to Section 64 to add the income of Minor in the hands of parent, having higher taxable income. The only exception was, where the Minor,....

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....n the hands of the minor and, if the parents do not survive, the income cannot be clubbed in the hands of any of his grandparents or anybody, who maintains minor child, and, therefore, the orders of two authorities bringing the income of minor to tax in the hands of the Minor deserve to be quashed. 35. While the foundational error in the order of the Tribunal is leaving the income of the Minor untaxed altogether, the error committed by the two authorities below, namely, Assessing Authority and First Appellate Authority, was that they held the income to be taxable in the hands of the minor girl herself, altogether forgetting the provisions of Sections 159 and 160 (1) (ii) in Chapter XV of the Act. They also possibly did not fully co....