1998 (7) TMI 12 - HC - Income Tax

Summary

Issues:
1. Taxability of income deemed to have accrued to a father from investments made in the names of his minor children.
2. Interpretation of provisions under section 64(1)(v) of the Income-tax Act, 1961.
3. Definition of "assessee" under section 2(7) of the Act.
4. Scope of total income for non-residents under section 5(2) of the Act.
5. Taxability of income of spouse or minor child under section 64 of the Act.
6. Obligation of the assessee to disclose income of spouse or minor child in the tax return.

Analysis:
1. The judgment addressed the issue of whether income deemed to have accrued to a father from investments made in the names of his minor children is assessable in the hands of the father, even when he had no other taxable income. The court examined the provisions of section 64(1)(v) of the Income-tax Act, which deal with the inclusion of income of a minor child from assets transferred by the parent. The court held that such income should be treated as the father's income for taxation purposes, regardless of whether the father had any other income.

2. The court analyzed the definition of "assessee" under section 2(7) of the Act, emphasizing that any person liable to pay tax under the Act is considered an assessee. This definition was crucial in determining the taxability of the income deemed to have accrued to the father from the investments made in the names of his minor children.

3. The judgment delved into the scope of total income for non-residents under section 5(2) of the Act, which includes income received in India or accruing in India during the year. The court highlighted the provisions that make a non-resident liable to pay tax on income accruing or arising in India.

4. The court examined the provisions of section 64 of the Act, which specify the inclusion of income of a spouse or minor child in certain circumstances. It discussed how income from assets transferred to a minor child should be included in the income of the parent who made the transfer, irrespective of the parent's other sources of income.

5. The judgment emphasized the obligation of the assessee to disclose the income of the spouse or minor child in the tax return, as required by Chapter V of the Act. It clarified that such income, even if the only income of the assessee, should be declared and taxed accordingly, as per the provisions of section 64 of the Act.

6. Referring to a previous Supreme Court decision, the court reiterated that all amounts representing the shares of the spouse and minor child in the profits must be disclosed in the return, as it forms part of the total income chargeable to tax. The judgment concluded by ruling in favor of the Revenue, rejecting the Tribunal's view and upholding the taxability of the income deemed to have accrued to the father from the investments made for his minor children.