NRIPENDRAKUMAR BHANDARI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a partner in the firm of M/s. Premier Credit Corporation, carrying on business as financiers. THE firm was constituted under a deed of partnership dated April 1, 1959, with effect from that date. THE assessee's two minor sons, Sunil Kumar and Ashok Kumar, were also admitted to the benefits of the partnership even at the time of its constitution. Clause 4 of the partnership deed provided for contribution of capital of Rs. 1,22,500 by the partners in fixed sums including the two aforesaid minors, who had to contribute capital of Rs. 26,250 each. THE partnership deed also provided that such capital shall not carry any interest, but any amount in excess of the capital contributed or any amount of profits or accretion thereof left in the firm, shall be treated as loan to the firm by the respective partners and it shall carry interest at the rate of 7 1/2 per cent. per annum.

(2.) FOR the assessment year 1962-63, the Income-tax Officer included in the assessment of the assessee the share income received by her two minor sons admitted to the benefits of the partnership invoking the provisions of Section 64(ii) of the Income-tax Act, 1961. The sums so included in her assessment were as under : <FRM>JUDGEMENT_158_ITR105_1976Html1.htm</FRM>

(3.) SO far as the scope of Section 64 is concerned, it is not restricted in its scope and it applies to either of the spouses unlike Section 16(3) which applied only to a husband or father. In Smt. Priti Lata Sctmanta v. Commissioner of Income-tax, the Allahabad High Court, while construing Section 64(ii), held that the income derived by a 'minor child because of his admission to the benefits of the partnership firm in which his mother also is a partner can be added to her income while computing her total income and that the word "individual" used in Section 64(i) cannot be restricted in its meaning to mean only to a male of the species and that the decision of the Supreme Court in Commissioner of Income-tax v. SOdra Devi, interpreting the provisions of Section 16 of the 1922 Act, cannot govern the interpretation of Section 64 of the 1961 Act. We have to, therefore, answer question No. 1 in the affirmative and against the assessee.