1975 (5) TMI 25 - AT - Income Tax

Summary

Issues:
- Addition of interest income of minor son in the hands of the assessee under section 64 of the IT Act, 1961.

Detailed Analysis:

The appeal in this case was filed by the assessee for the assessment year 1971-72, challenging the addition of Rs. 1,020 being the interest income of the minor son of the assessee, upheld by the AAC. The minor son was a partner in a firm along with his father, and the ITO included his share of profit in the assessee's income. The assessee contended that the interest on the capital invested by his son in the firm should be excluded, as he claimed the amount belonged solely to the son and not the assessee. The ITO rejected this claim, relying on a commentary on income tax. The AAC affirmed the decision, prompting the appeal.

The assessee presented various documents, including the partnership deed, assessment order of the minor son, and submissions, to support his claim that the capital invested by the son was received as per a will and had no connection to the assessee. The partnership deed indicated that partners could invest capital in any proportion agreed upon, and the minor son had invested in another firm before depositing Rs. 25,000 in the current firm. The Tribunal opined that the investment by the minor son could not be considered as his capital in the firm where his father was a partner. Citing precedent cases, the Tribunal concluded that the interest income of the minor son should not be added to the assessee's income under section 64 of the IT Act, and thus, the addition of Rs. 1,020 was deleted.

In summary, the Tribunal found merit in the assessee's argument that the interest income of the minor son should not be added to the assessee's income under section 64 of the IT Act. The Tribunal analyzed the documents provided by the assessee and concluded that the investment by the minor son did not constitute his capital in the firm where his father was a partner. Relying on legal precedents, the Tribunal allowed the appeal, thereby deleting the addition of the interest income in question.