COMMISSIONER OF INCOME TAX Vs. S K NAYAK

JUDGEMENT

(1.) THE Tribunal, Bangalore Bench, has referred the following question in these two references under s.256(1) of the IT Act, 1961, for the opinion of this Court :

(2.) THE assessee is a managing director of M/s Colorinks (P) Ltd., and his wife, Smt. Shalini S. Nayak, has been working as a wholetime director in that company. She was paid remuneration by the assessee. THE remuneration paid to her in the asst. yr. 1978- 79 came to Rs. 13,231. THE ITO did not allow deduction under s. 16(1) in respect of the remuneration of the assessee's wife. He included the gross salary received by her in the total income of the assessee under s. 64.

(3.) THE short question that arises for consideration is whether S. 64(1) permits clubbing of net income of the spouse or the gross income. Sec. 64(1)(ii) provides for clubbing the income of the spouse with the income of the assessee received by the former by way of salary, commission, fees or any other form of remuneration from a concern in which the assessee has a substantial interest. THEre is, in this case, no dispute regarding the clubbing of the income of the wife with the assessee's income. THE dispute is only as to whether the income of the wife should be the gross income for the purpose of clubbing or the net income after allowing the expenses and standard deductions.