TaxTMI 
TaxTMI 
2005 (2) TMI 441
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....; Rs. 3,000 -------------- Rs. 8,50,115 --------------....
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....s is as under:- "On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the deduction under section 80L pertaining to the income of the minor children be allowed before clubbing the same with the income of the assessee under section 64(1A) the IT Act, 1961." 7. At the time of hearing before us on behalf of revenue Shri Mohit Kapoor appeared and contended that section 64(1A) was inserted by the Finance Act, 1992 with effect from 1-4-1993. After this insertion minor cannot be assessed under the IT Act unless minor is a child suffering from any disability specified in section 80U of the Act. Reliance was also placed on the provisions contained in section 10(32) of the IT Act according to which for and from the assessment year 1993-94, in the case of an assessee referred to sub-section (1A) of section 64, any income includible in his total income under that sub-section, to the extent such income does not exceed Rs. 1,500 in respect of each minor child is exempt. The Learned DR submitted that once the income of minor child was included in the gross total income of the assessee, only deduction permissible was Rs. 1,500 per minor child under ....
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....duction was allowed under section 143(3). 10. In rejoinder, the learned DR submitted that in the decision relied by learned Authorized Representative of assessee on the decision of Karnataka High Court, the issue was regarding inclusion of net income as computed under the head "income from salary" and issue regarding allowance of deduction under section 80L of the IT Act. The Learned DR submitted that up to the assessment year 1992-93 income of minor child could be clubbed as per provisions contained in clause (v) of section 64(1) of the IT Act, clause (v) of section 64(1) (pertain for assessment years 1976-77 to 1992-93) provide that in computing the total income of the individual, there shall be included all such income as arises directly or indirectly to minor child of such individual or otherwise than for adequate consideration. This clause was omitted by Finance Act, 1992 and section 64(1A) as well as section 10(32) were inserted with effect from 1-4-1993. Learned DR accordingly submitted that various case laws relied prior to insertion of clause 1(A) to section 64 of the Act and clause (32) to section 10 of the Act are not relevant because with effect from 1-4-1993, only d....
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....r to the benefits of partnership in a firm, (ii) assets transferred directly or indirectly to the minor child by-such individual otherwise that for adequate consideration, and (iii) assets transferred directly or indirectly by such individual to any person or association of persons otherwise than for adequate consideration, to the extent to which income from such assets is for the immediate or deferred benefit of such individual's minor child. In reality as well as in law, the minor children cannot administer their property nor can they take decisions on the disposal of income arising therefrom. These responsibilities fall on parents, who, for all practical purposes, treat and use this income as part of their own income. Exclusion of minor children's income from the income of their parents also leads to tax avoidance. The aforesaid provisions of section 64 with regard to clubbing of minors' income had also led to litigation between the Income-tax Department and the assessees. Section 64 of the Income-tax Act has, therefore, been amended to provide that all income of a minor is to be included in the income of his parent. However, the income derived by the minor from manual wor....
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....ity to compute the 'total income' of minor as defined in section 5 of the IT Act unless minor child is suffering from any disability of nature specified under section 80U or income is of such a nature as provided in proviso to section 64(1A). Up to the assessment year 1992-93 minor could be assessed to tax whereas after insertion of sub-section (1A) minor has no locus standi under the IT Act unless minor child suffering from any disability of the nature specified under section 80U or in respect of such income as arises or accrues to 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. 15. In this context we have also gone through the provisions of section 80L. Section 80L(i) reads as under:- "Deduction in respect of interest on certain securities, dividend etc. 80L(1) "Where the gross total income of an assessee, being"- (a) individual (b) a Hindu undivided family include any income by way of-" 16. Section 80L(1) contains the word 'assessee'. After the insertion of clause (1A) to section 64 minor cannot be assessed unless the minor child suffering from any....