COMMISSIONER OF INCOME TAX Vs. RAMESH CHANDRA SOGANI

JUDGEMENT

(1.) In this reference under Section 256(1) of the Income-tax Act, 1961, relating to the assessment year 1976-77, the following question of law has been referred to this court:

(2.) The facts shortly stated are that the assessee's minor son, Master Rajesh Sogani, was admitted to the benefits of partnership in the firm, Messrs. Anil Kumar Mahendra Kumar. During the year under appeal, the said minor's share in the firm was determined at Rs. 8,599 and interest payable by the firm to the minor on the loans advanced by him was worked out at Rs. 11,480. The Income-tax Officer, while computing the assessee's total income, included both the amounts, i.e., share from firm and the interest under the provisions of Section 64(1)(iii).

(3.) On appeal, the Appellate Assistant Commissioner confirmed the inclusion of the share income but he excluded the interest income of Rs. 11,480 from the assessed total income of the assessee as the interest income was considered by him to have accrued on the loans advanced by the minor out of his own funds.