AI Drafter 
TaxTMI 
TaxTMI 
2025 (6) TMI 655
X X X X Extracts X X X X
X X X X Extracts X X X X
....luded in the total income of the either parents will continue to be included in the income of the that very parent, unless the AO is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do?" 2. The appellant filed return of income for the assessment year 1997-1998 on 29/10/1997 declaring total income of Rs. 4,30,556/-. 3. The case of the appellant was selected for scrutiny. As the appellant claimed set-off of loss of minor son amounting to Rs. 7,55,041/-, the same was subject matter of scrutiny. The Assessing Officer in view of the assessment orders for the Assessment Year 1995-1996 and Assessment Year 1996-1997 where dis-allowance of loss owing to interest incurred by minor son which was claimed and the assessment order of the husband of the assessee Shri Vijaykumar D. Gupta for the Assessment Year 1995-1996 and for the Assessment Year 1996-1997 holding the same to be disallowable passed an assessment order disallowing the loss of Rs. 7,55,041/- claimed as set-off by the appellant assessee from her income on the ground that such loss of payment of interest by the minor son of the appellant assessee could not have been allowed as held ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ands of minor is hereby disallowed. The disallowable interest works out to Rs. 7,55,041/-." 5. Being aggrieved the appellant assessee preferred an appeal before the CIT (Appeals). The CIT (Appeals) by following the order in case of the husband of the appellant assessee Mr. V. K. Gupta for the Assessment Year 1995-1996 allowed the appeal filed by the appellant assessee deleting the disallowance of interest claimed as set-off from the income by the appellant assessee which was pertaining to the interest of minor son claimed by the assessee as set off from the income. The CIT (Appeals) referred to and relied upon the para-20 the order dated 01/02/2000 in case of Mr. Vijaykumar D. Gupta for the Assessment Year 1995-1996 passed by the CIT (Appeals) as under:- "The facts of the 5th ground of appeal are that the assessee had claimed loss of minor son Mohit Gupta clubbed under section 64(1)(A) of the Act being interest paid to M/s sharma Finance Co. for investment made by him. The minor had claimed to have made investment in the shares of M/s GACL in 4 lakh shares out of promoters quota at the rate of Rs. 15/- per share at Rs. 60 Lakhs. The amount invested in shares of M/s GACL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessing Officer was correct in law in not allowing the clubbing in the hands of the mother and the CIT (Appeals) was not correct in adjusting the loss of the minor against the income of the mother. The Tribunal thereafter considering the provisions of Section 64(1A) of the Act, allowed the appeal of the Revenue observing as under: "4. We have carefully considered the rival submissions and perused the orders of the authorities below. We find that section 64(1A) lays down as under: [(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child [not being a minor child suffering from any disability of the nature specified in section 80U]: Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any- (a) manual work done by him; or (b) activity involving application of his skill, talent or specialized knowledge and experience; Explanation - For the purpose of this sub-section, the income of the minor child shall be included,- (a) where the marriage of his parents ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the question of clubbing was not considered either by the Assessing Officer or by the CIT (Appeals) and therefore, the Tribunal could not have gone into the same by invoking provision of Section 64(1A) of the Act because such question would become academic in view of the fact that on merits also, the interest payment made by the minor was allowed as set off from the income of the mother for previous Assessment Year 1996-1997 as well as current Assessment Year 1997-1998 by both the authorities. 11. Learned advocate Mr. B. S. Soparkar invited the attention of the Court to the judgment passed on 11/07/2016 by this Court in case of husband of the appellant in Tax Appeal No.874 of 2009 and allied matters wherein the payment of interest by the minor son was treated as allowable expenditure under the provisions of Section 36(1)(iii) of the Act relying upon the decision in case of Pramukh Oxygen Ltd. vs. DCIT rendered in Tax Appeal No.474 of 2006 and allied matters. 12. It was, however, submitted that the Tribunal has not considered the merits of allowance or disallowance but has only relied upon the provision of Section 64(1A) to allow the appeal of the revenue which was never....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the minor child shall be included,- (a) where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub- section is greater; or (b) Where the marriage of his parents does not subsist, in te income of that parent who maintains the minor child in the previous year, and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.]" 15. The Tribunal while allowing of the appeal of the Revenue has come to the conclusion that in view of the above provision of Section 64(1A) of the Act, the CIT (Appeals) was not correct in allowing the loss incurred by the minor son against the income of the assessee mother which ought to have been clubbed in the income of the father Mr. Vijaykuar D. Gupta as the same was done for Assessment Year 1995-1996. However, the Tribunal has lost sight of the glaring fact that for Assessment Year 1996-19....