COMMISSIONER OF INCOME TAX Vs. VIPINCHANDRA C SANGHAVI

JUDGEMENT

(1.) BY this reference filed under section 256(1) of the Income -tax Act, 1961, the following questions of law have been referred to this court by the Income -tax Appellate Tribunal at the instance of the Revenue : '1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share profit of the assessee's spouse Smt. Lina V. Sanghavi, from the firm of Ashit Constructions, Pune, is not includible under section 64(1)(i) of the Act, in the assessment of the assessee ?

(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the Commissioner's order under section 263 of the Act ?' 2. This reference relates to the assessment year 1975 -76.

(3.) SECTION 64(1) of the Act, as it stood at the relevant time, reads as follows : '64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly - (i) to the spouse of such individual from the membership of the spouse in a firm carrying on a business in which such individual is a partner; (ii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner; (iii) subject to the provisions of clause (i) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart; (iv) subject to the provisions of clause (i) of section 27, to a minor child, not being a married daughter of such individual, from assets transferred directly or indirectly to the minor child by such individual otherwise than for adequate consideration; and (v) to any person or association of persons from assets transferred otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse or minor child (not being a married daughter) or both. Explanation. - For the purpose of clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of clause (ii), where bath the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater; and where any such income is once included in the total income of either spouse or parent, any such income arising in any succeeding year shall not be included in the total income of the other spouse or parent unless the Income -tax Officer is satisfied, after giving that spouse or parent an opportunity of being heard, that it is necessary so to do.'