TaxTMI 
TaxTMI 
1961 (8) TMI 3
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.... income of the two minor sons for 1949-50 assessment year and on the share income of one minor son for 1950-51 assessment year included in the computation of the total income of the assessee under the provisions of section 16(3)(a)(ii) of the Income-tax Act ? " The respondent, S. A. S. Marimuthu Nadar, was the manager of a Hindu undivided family. The family consisted of Marimuthu Nadar, his two major sons and two minor sons. On August 16, 1946, the family divided, and a firm came into existence. Marimuthu Nadar and his two major sons took 4/16th share each and the two minor sons were admitted to the benefits of partnership to the extent of 2/16th share each. For the assessment year 1949-50 (the previous year ended on August 16, 1948) the ....
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....ome of the father. The contention, however, is that earned income relief can only be granted to the father in respect of his own individual share of profits and not in respect of the share of the minor or minors, as held by the High Court. The Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal held that in view of the definition of " earned income " in section 2(6AA), only that portion of income was entitled to this relief which satisfied the condition that it was earned by the person to whom it belonged before its inclusion in the total income of another, and that in the case of an unregistered firm, the minor or the wife, as the case may be, must, as a partner, have been actively engaged in the conduct of the busine....
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....e words of the last paragraph of the section are " and includes any such income ", and the question is what income is indicated by the word " such ". Three readings of the section were considered at the hearing ; but one of them must be rejected as clearly not admissible. That reading is to take " such " back to the words " any income of an assessee " in the opening part of the definition. It is not necessary to give detailed reasons why this reading is not permissible. It is enough to say that if the latter part of the section is read in this extended form, it makes no sense. The other two readings were pressed upon us for our acceptance respectively by the rival parties. It is admitted by both sides that the quality of the income which ....
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....er they are satisfied in respect of the share of the profits of the minors in the two assessment years. According to the department, " such income " must be earned income, and earned by the person who receives it in the first instance and not by the person in whose total income it is included by the Act. In other words, to get the benefit, the income must be earned actively by the minor or the wife, before it can qualify for the earned income relief in the hands of the father or the husband, as the case may be. The case of the other side is that so long as the father or the husband has worked actively as a partner, the income would be entitled to the relief, even though it was initially the income of the minor son or the wife. In the case o....