1981 (1) TMI 115

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....ncome from these firms as well as the interest paid to the minors by the firms were clubbed with the income of the assessee under s. 64(1)(iii). When the matter went up in appeal to the CIT (A) it was argued before him that the provisions of s. 64(1)(iii) were applicable only from the asst. yr. 1977-78. This was, however, negatived by the ld. CIT (A) in view of the facts that s. 64 in its present form was substituted by s. 13 of the Taxation Laws (Amendment) Act, 1975 w.e.f. 1st April, 1976 and, therefore was applicable from the asst. yr. 1976-77 onwards. Regarding the clubbing of the interest paid to the minors by the various firms the learned representative for the assessee relied upon the decisions of the Allahabad High Court in CIT vs. ....

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....includes the opening balance and to this account is credited the profit from the firm as well as the interest or loss and it is then taken to the next year. For example, in the case of Navin Kumar in the books of Kishan Gopal Om Nath for the asst. yr. 1976-77 the interest of Rs. 20,722/65 has been credited to his account and since there was a loss in this year, no entry has been made for the same. "...The profits, however, have always been shown in this account. This would clearly show that the amounts appearing in the books of the various firms in the names of minor partners is treated as their capital account. (3) In the partnership deed cl. 7 of the partnership deed in the case of M/s. Kishan Gopal Om Nath dt. 26th June, 1971 inter....

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.... regard and the claim of the appellant on this issue cannot, therefore, succeed. I am, therefore, of the opinion that the ITO has rightly included the interest income of Rs. 43,181 in the case of minor Sharad Kumar and Rs. 35,033 in the hands of minor Navin Kumar as the income of the appellant. These amounts have been included in the share incomes from various firms in the hands of these two minor sons and are confirmed." The assessee is now in appeal before us. 2. The learned representative for the assessee repeated the arguments advanced before the CIT (A) and, in particular, the decisions of the Allahabad High Court referred to supra. We have gone through these decisions and find that the proposition laid down in these cases is tha....