TaxTMI 
TaxTMI 
1985 (9) TMI 79
X X X X Extracts X X X X
X X X X Extracts X X X X
....cts and in the circumstances of the case, interest paid on borrowings utilised in the purchase of shares in the names of the wife and minor child of the assessee were allowable in computing his taxable income for the assessment years 1963-64 to 1970-71 ? (2) Whether the Tribunal erred in law in holding that it was only income that arose from assets transferred directly or indirectly to the spouse or minor child of the individual that could come in for consideration under section 64 of the Income-tax Act, 1961, and that the assessee could not claim for adjustment of losses under that section ? (3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the share of income of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee claimed these amounts as deductions permissible under section 57(iii) of the Income-tax Act, 1961, as being the expenditure laid out and expended for the purpose of earning income chargeable under the head " Income from other sources ". The Income-tax Officer disallowed the claim in respect of all the above amounts, as there was no corresponding source of income and on the ground that it was not explained as to how the withdrawals from M/s. Amarchand Dharamchand had been utilised. The assessee filed appeals against the decision of the Income-tax Officer to the aforesaid effect in the said assessment years. The assessee placed before the Appellate Assistant Commissioner the details of investments which showed that a part of these am....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 64(iii) read with the other relevant provisions of the Income-tax Act, 1961, show that, for the purposes of the Income-tax Act, the income of the wife and the minor son from the shares purchased as aforesaid was liable to be treated as the income of the assessee and hence any expenditure laid out by the assessee for earning that income must be allowed by way of deduction. In order to examine the correctness of these submissions, it is necessary to refer to certain provisions of the Income-tax Act, 1961. Section 57 of that Act deals with deductions. The relevant provisions of that section, at the relevant time, ran as follows : " 57. The income chargeable under the head 'Income from other sources' shall be computed after making the follo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....same day in the name of his minor son to whom he admittedly gifted the amount. There were similar transactions in the two succeeding years. In the last Samvat year, namely, S.Y. 2014, there was a large debit balance against the assessee in his account in the firm from which he had withdrawn the amounts and he paid interest of Rs. 26,197 to that firm on account of his excess withdrawals. This interest was payable in the assessment year 1959-60. In his return for that assessment year, the assessee included in his income the amount of interest of Rs. 25,375 which his minor son had received from the limited company in which the amounts withdrawn by him from the said firm had been deposited as aforesaid, but claimed as deduction the interest whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly-... (iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration." We find that although these provisions are not identically worded as in the relevant provisions of section 57 and section 64 to which we have referred earlier, they are in pari materia. In fact, it appears that the provisions of section 64 are similar to the provisions of section 16(3) of the Indian Income-tax Act, 1922. Although it is not specifically stated as to under what head the income referred to in section 64 is to be placed in the return of the assessee, it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erial for the purpose of determining the construction of the provisions before us and hence minor differences of facts which is bound to occur between one case and another is of no relevance. It was next submitted by Mr. Jetly that in the case before us, there is no close proximity between the amounts invested by the assessee in purchasing shares in the names of his wife and minor son and the interest which the assessee had to pay on the borrowed amounts which were invested as aforesaid, as no dividend has been earned on the aforesaid shares. According to him, there might have been such a close proximity had the said shares so purchased earned any dividend but not in a case like this where no dividend had become payable. We are at a total l....