COMMISSIONER OF INCOME TAX LUDHIANA Vs. OM PRAKASH

JUDGEMENT

(1.) A conflict of opinion among the High Court on the meaning and interpretation of Clauses (i) and (ii) of sub-section (1) of Section 64 (as they stood prior to 1st April, 1976) of the Income-tax Act, 1961 falls for resolution in this batch of appeals. Prior to April 1, 1976 the said clauses along with the explanation read thus:

(2.) We may make it clear, at the outset, that whatever we say hereinafter is relevant only to the aforesaid provision contained in Clauses (i) and (ii) of Section 64(1), i. e., to clauses (i) to (ii) as they obtained prior to April 1, 1976.

(3.) The sub-section opens with words "in computing the total income of any individual", and provides for incision of the income arising directly or indirectly to persons specified in the sub-section, in the situation specified therein, in the total income of such individual. Clause (i) says that where the spouse of an individual is the member of a firm wherein the individual is a partner, the income of such spouse shall be included in the income of that individual. The Explanation contained in Sub-section (i) says that among the spouses, the income of the spouse with lesser income shall be included in the income of the spouse having larger income. It does not matter whether the individual in whose income the income of the spouse is included is husband or wife. Clause (ii) says that if the minor child of such individual is admitted to the benefits of the partnership firm, in which such individual is a partner, the income arising to such minor child shall be included in the income of such individual. The Explanation clarifies that where both the mother and father of a minor child are partners in the firm (to benefits of which such minor child is admitted), the income of the minor child shall be included in the income of that parent whose total income (excluding the income referred to in clause (ii) is greater.