9911796707
TMI Blog1983 (10) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... red in applying section 64(1)(iv) of the Income-tax Act, 1961 (' the Act '). These appeals are barred by limitation by two days and the assessee filed an affidavit accompanied by a petition for condonation of the delay. After going through the affidavit we find there was sufficient cause for the delay and, therefore, the delay is condoned. 2. The facts of the case in brief are that the assessee is a resident individual and derives income from property, share income and own business as a producer, distributor and financier of the cine films. The assessment years involved are 1979-80 and 1980-81 for which the respective calendar years are the accounting years. The assessee gifted some agricultural lands to his wife and the ITO included the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent orders and dismissed the appeals. 4. The learned counsel for the assessee reiterated the contentions urged on behalf of the assessee before the Commissioner (Appeals) and relied on the Board Circular No. 126, dated 28-11-1973, wherein it has been stated that as the agricultural income does not form part of total income, the provisions of section 64 do not apply in respect of such income. In other words, it has been stated that the agricultural income derived from the assets transferred by an individual to his spouse or minor children will not form part of its net agricultural income. He referred to the decision of the Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 in support of his contention that the Board's cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed with the income of the individual. ' Total income ' is defined in section 2(45), according to which total income means the total amount of income referred to in section 5 of the Act, computed in the manner laid down in this Act. Section 5 provides the scope of total income both for a resident as well as non-resident. When once the scope of total income is considered in terms of section 5, it is necessary to consider the computation of total income in the manner laid down in this Act. Sections 1 to 59 of the Act deals with the computation of total income under various heads of income. Therefore, it is necessary to compute the total income in accordance with Chapter IV only. Chapter V of the Act provides for inclusion of income of other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . E---Capital gains. F---Income from other sources." It is clear that section 14 not only enumerates the heads of income for computation of total income, it is also for the purpose of charging income-tax. Reading section 4 and section 14 together, it will be evident that the charging of income-tax at the rate prescribed by the Finance Act shall be governed by section 14 both for the purpose of charge of income-tax and computation of total income. Obviously the income arising from agricultural lands transferred to the assessee's wife falls beyond the heads of income enumerated in section 14. Therefore, the logical conclusion is that in accordance with and subject to the provisions of the Act, agricultural income is not a chargeable ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreting the provisions of law and coming to the conclusion that the agricultural income arising to the spouse of the individual out of the agricultural lands transferred by him should be clubbed under section 64(1)(iv) for the purpose of total income. In this view of the matter, therefore, we set aside the orders of the authorities and direct that the agricultural income arising to the spouse of the individual out of the agricultural lands transferred by the individual to the spouse should not be clubbed under section 64(1)(iv) and modify the assessment, accordingly. 6. In the result, the appeals are allowed. Per Shri P.S. Dhillon, Judicial Member --- I agree with the conclusion of my learned brother, stating therein that the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X
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