S BALACHANDER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee owned a house in his own right, threw that property into a hotchpot, regarded it as a joint family property consisting of himself, the other members of the family being his wife and son, proceeded to effect a partition between the father and son under a deed of partition dated October 31, 1977. Under that partition one floor of the building, which comprises two floors was divided and allotted to the share of the son, the other floor being retained by the father. THE son was obligated under the terms of the deed to pay a sum of Rs. 1,250 to the assessee's wife and that payment was secured by a charge on the portion allotted to the son.

(2.) SECTION 64(2) of the income-tax Act, which is a special provision providing for clubbing the income of the spouse and minor child with that of the individual in certain cases, in Clause (c) of Sub-section (2), as it stood during these assessment years, viz., assessment years 1978-79 to 1981-82, reads thus :

(3.) THE only link with the property here is the charge created in favour of the wife for the purpose of securing the payment of the monies which the son is obligated to pay to his mother. THE creation of a charge does not result in making the amount for which the charge is created an income from the property on which such charge is created. When a company borrows money from a bank and creates a charge on its assets in favour of the lender, it cannot possibly be said that the amount borrowed is an amount which was derived as income by the borrower from the assets owned by it and on which a charge is created. THE occasion for enforcing a charge arises only when default is committed and the existence or otherwise of the charge would be immaterial during the period when there is no default. This is not a case where the mother had recovered arrears of the maintenance which the son was required to pay in terms of the partition by enforcing a charge and receiving the amount from the sale proceeds of that property.