PUSPA DEVI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal 'A' Bench, Allahabad, has, under Section 256(1) of the Income-tax Act, 1961 (herein after referred to as "the Act"), referred the following question for the opinion of this court :

(2.) THE relevant facts are that one Sri Narendra Kumar was a partner in a firm styled as Messrs. Malik Chemical Works, Bulanala, Varanasi. THE said Sri Narendra Kumar died leaving behind him the present assessee as his widow and five minor sons, namely, Ashok Kumar, Rakesh Kumar, Rajesh Kumar, Rajendra Kumar and Surendra Kumar. After the death of the said Sri Narendra Kumar, the aforesaid minors were admitted to the benefits of the said partnership firm. THE present assessee was not a partner in the said firm.

(3.) SUCH a contention is not being raised for the first time before this court. It has already been raised before several other High Courts and rejected. This contention was raised in a writ petition before the Hon'ble Andhra Pradesh High Court in Sivalal Sogaji, In re [1983] 140 ITR 39. It was rejected in a brief judgment observing that there is no ambiguity in the language of Section 64(1)(iii) of the Act so as to support the distinction sought to be drawn by learned counsel for the assessee on the ground that such minor's income can be included in the individual assessee's income only in case the assessee has, as an individual, income above the taxable limit. It was also observed that this provision was enacted to bring all such income to tax with a view to plug evasion of tax by the assessees by transferring assets to minors or by deriving income admitting the minors to the benefits of partnership in a firm. Again, in CIT v. G. Gopal Rao [1985] 151 ITR 308, the same High Court had an occasion to consider a similar argument in a reference made by the Income-tax Appellate Tribunal under Section 256(1) of the Act. As in the case before us, Gopal Rao too had no income of his own. The contention put very strenuously before the court was that, in such a situation, Section 64(1)(iii) could not be applied. The reference was answered in favour of the Revenue and it was held that the income arising to the minor children of an individual on their admission to the benefits of a partnership firm is includible in the total income of such individual under Section 64(1)(iii) of the Act notwithstanding the fact that such an individual has no total income at all from any other source.