Section 13 - Amendment of section 64 - Taxation Laws (Amendment) Act, 1975

13. Amendment of section 64. In section 64 of the Income-tax Act, (a) for sub-section (1), the following sub-section shall be substituted, namely: (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 the spouse of such individual by way of salary, commission, fees or any other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest: Provided that nothing in this clause shall apply in relation to any income arising to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of his or her technical or professional knowledge and experience; (iii) to a minor child of such Individual from the admission of the minor to the benefits of partnership in a firm; (iv) subject to the provisions of clause (i) of section 27, in a case not falling under clause (i) of this sub-section, 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; (v) subject to the provisions of clause (i) of section 27, in a case not falling under sub-clause (iii) of this sub-section, 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; (vi) to the son s wife, or son s minor child, of such individual, from assets transferred directly or indirectly on or after the 1st day of June, 1973, to the son s wife or son s minor child by such individual otherwise than for adequate consideration; and (vii) to any person or association of persons from assets transferred directly or indirectly 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 1. For the purposes of clause (f). 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 purposes of clause (iii), 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. Explanation 2. For the purposes of clause (ii), an individual shall be deemed to have a substantial interest in a concern (i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent. of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of his relatives; (ii) in any other case, if such person is entitled, or such person and one or more of his relatives are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent. of the profits of such concern. Explanation 3. For the purposes of clauses (iv) and (v), where the assets transferred directly or indirectly by an individual to his spouse or minor child are invested by the spouse or minor child in any business, that part of the income arising out of the business to the spouse or minor child in any previous year, which bears the same proportion to the income of the spouse or minor child from the business as the value of the assets aforesaid as on the first day of the previous year bears to the total investment in the business by the spouse or the minor child as on the said day, shall be included in the total income of the individual in that previous year. ; (b) in sub-section (2), (i) in clause (b), the words , in so far as it is attributable to the interest of the individual in the property of the family, shall be omitted; (ii) for clause (c), the following clause shall be substituted, namely: (c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived, from such converted property as is received by the spouse or minor child on partition shall be deemed to arise to the spouse or minor child from assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, no far as may be, apply accordingly: ; (iii) in the proviso, for the words minor son , the words minor child shall be substituted; (iv) in the Explanation,- (A) the brackets and figure (1) shall be omitted; (B) clause (2) shall be omitted.