COMMISSIONER OF INCOME TAX Vs. SAVITRI DEVI SMT

JUDGEMENT

(1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal (Delhi Bench "E", Delhi) referred the following questions relating to the assessment year 1976-77 for the opinion of this court :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 4,334 made under Section 64(1)(iii) of the Income-tax Act, 1961, from the total income of the assessee for the assessment year 1976-77 ?"

(3.) THE only question for consideration is whether the interest accruing on capital contribution by the minors in the firms in which the assessee was a partner is includible under Section 64(1)(iii) in the total income of the assessee. In Kaladhar Prasad Chaturvedi v. CIT [1971] 82 ITR 713, this court made a distinction in respect of the interest accruing on capital investment and deposits simpliciter. In that case, this court held that interest accruing on deposits made by a minor was not includible in the total income of his parent under Section 64(1)(iii) but interest accruing on capital investment was includible under that provision. In CIT v. Smt. Nirmala Devi [1987] 166 ITR 253, the Madhya Pradesh High Court held that interest accruing on capital investment was includible in the total income of a parent under Section 64(1)(iii). A similar view was taken by the Allahabad High Court in CIT v. Sri Ram Ratan [1996] 217 ITR 692, In these authorities, it has been unequivocally held that interest accruing on capital investment made by the minors will be includible under Section 64(1)(iii) in the total income of a parent.