1979 (9) TMI 28

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.... His contention was that the 10% limit as contemplated by s. 23(2) of the I.T. Act, 1961 (shortly "the Act"), was relatable to the total income of the assessee without including therein the minor's income assessable in his hands under s. 64 of the Act. The ITO repelled the contention. On appeal, the AAC disagreed with the ITO and upheld the contention. Feeling aggrieved the department preferred an appeal before the Tribunal. The Tribunal preferred the view taken by the ITO and reversed the order passed by the AAC observing: " Section 2(45) defines 'total income' as to mean the total amount of income referred to in section 5 computed in the manner laid down in the Act. Section 5 on its part brings within the ambit of total income of a pers....

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.... is no other exclusion envisaged. It would, therefore, not be correct to exclude the income enjoyed under section 64. In this respect, we may as well refer to section 80B(5) of the Act which defines "gross total income". There, a specific exclusion of the income under section 64 has been provided for. Had the Legislature so envisaged for section 23(2) as well, it would have naturally enacted so in its proviso." At the instance of the assessee, the Tribunal has referred the following questions of law for our opinion: " 1. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in holding that the term 'total income of the owner under the proviso to section 23(2)' includes income under section 64 ? 2. Wheth....

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....ably shows that the owner in question must be a natural person, that is, what is known in income-tax law as "an individual". Therefore, when the proviso speaks of total income of the owner, it is in this sense that the word "owner" has been used in it. It has no other significance. It does not limit or restrict the meaning of the expression "total income", which has to be understood as it is defined in cl. (45) of s. 2 of the Act. Under that definition the "total income" means "total amount of income referred to in section 5 computed in the manner laid down in this Act". Section 5 reads thus : " 5. Scope of total income.-(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes....

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....and which is not excluded under Chap. III. The crucial words in the definition are "computed in the manner laid down in the Act". The requirements of computation of "total income in the manner laid down in this Act" attract other provisions of the Act. They are : (i) those that relate to items deemed to be the income of the assessee [sections 7(i), 7(ii), 41(1), 41(4), 58 to 69B, 198], (ii) those that relate to the incomes of other persons, but which are fictionally regarded as the income of the assessee [sections 60, 61, 62(2), 64 (i to iv), 92], (iii) those that relate to incomes on which no tax is leviable but which are nevertheless included in the total income for rate purposes (sections 86 and 86A), (iv) those that relate to th....