2001 (1) TMI 36 - HC - Income Tax

Summary

Issues involved:
The issue involves the interpretation of section 64(1)(i) of the Income-tax Act, 1961, specifically regarding the assessment of income of the assessee's wife from a firm in the hands of the assessee for the assessment years 1968-69 and 1969-70.

Factual Background:
During the relevant assessment years, both the assessee and his wife were partners in a firm, and the income was assessed under section 64(1)(i) in the hands of the wife for the previous assessment year. However, for the years 1968-69 and 1969-70, the Assessing Officer taxed the wife's share income from the firm in the hands of the assessee. The Commissioner of Income-tax (Appeals) held that there was no provision in the Explanation to section 64(1)(i) to deviate from the earlier practice based on the quantum of income of the assessee and spouse. The Tribunal, on appeal by the Revenue, upheld the Assessing Officer's decision, leading to the reference to the High Court.

Court's Analysis:
The court examined section 64(1)(i) along with the Explanation, which states that the total income of the spouse to be included is the one whose total income (excluding the relevant income) is greater. Each assessment year needs to be considered separately based on the facts of that year. The term "total income" is defined in section 2(45) of the Act, encompassing all income received or deemed to be received in India. Therefore, the Tribunal's decision to assess the income based on the total income of each year was deemed justified by the court.

Conclusion:
The court upheld the Tribunal's decision, stating that the assessment for each year must be done independently based on the total income of that specific year. The court answered the question in the affirmative, favoring the Revenue and ruling against the assessee.