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TMI Blog1982 (4) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... s karta of HUF. In the case of Sri. C. Subbiah Chettiar, his minor sons were admitted to the benefits of partnership in the firm of Jayalakshmi Javuli Stores, Cumbum, but it is stated that he was not a partner in the said firm in any capacity. In the case of Shri P.A. Venkataraman, the only fact disclosed on record is that his minor childrens' share income from the firm of Jawaharlal Jagadeesh is sought to be assessed in his hands and there is nothing on record to show whether he was a partner in the same firm representing his HUF as its karta or not. 3. The dispute common to all these appeals is on the question of the assessment in the hands of each of the assessee the share income from certain firms of his minor children for the relevant assessment years under section 64(1)(iii). It is not necessary for us to go into the actual figures of share incomes included in the assessment of each assessee and the details or the particulars of the firm from which the share income was derived by the minor children by their admission in the said firms because the dispute is one on a question of law concerning the interpretation of the provisions of section 64(1)(iii). The common material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned departmental representative's submission, the language is clear and unambiguous and the inclusion provided is mandatory. He also sought support for this contention on the provisions of section 139 where it is stated that every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded... shall furnish a return of his income or the income of such person... etc. It is further submitted that it is not necessary to establish that by the inclusion of the share income of the minor children in the parent's hands, the revenue is benefited as no such consideration is material or relevant as income includes the negative figure or loss and if the amount sought to be included under section 64 represents a loss or a minus figure, still the amount has to be included under section 64. Reference in this connection was made and reliance placed on the decision of the Mysore High Court in the case of Dr. T.P. Kapadia v. CIT [1973] 87 ITR 511. In this connection the observations of the Supreme Court in CIT v. Harprasad Co. (P.) Ltd. [1975] 99 ITR 118 are referred to wherein it is observed that from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provision which makes the income specified therein the total income of the parent-individual and it only provides for inclusion of such income in the total income of the individual himself and this naturally pre-supposes the existence of the separate individual income of the parent. The scheme of the section, it is submitted, is to keep the minor's income intact and not to treat it as income of the parent, but only to include it in determining the parent's total income. Reference was also made to the marginal note to section 64 reading 'Income of individual to include the income of spouse, minor child, etc.'. Reference was also made to and reliance placed on the decision of the Madras High Court in K.P.M. Abdul Majeed v. ITO [1970] 78 ITR 124. In this case it was held that where a person denudes himself of the entire land owned by him making gift thereof to his wife or minor children, under the terms of section 10(1) of the Madras Agricultural Income-tax Act and the definition of the expression 'to hold' contained in the said Act, the provisions of the Act would be inapplicable to him and there is nothing in section 9(2) to alter the position and, consequently, the transfer canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in CIT v. Manilal Dhanji [1962] 44 ITR 876 in regard to corresponding provisions of section 16(3) of the 1922 Act, to overtake and circumvent tendency on the part of taxpayers to endeavour to avoid or reduce incidence of tax by devices adopted by means of settlement or by admission of minor children to the benefits of partnership in a firm. The requirement of the section, as it originally stood, to attract its operation in regard to inclusion of the minor childrens' share income from a firm, was that such income should arise to the minor child in a firm in which the parent is a partner. But this requirement appears to have been done away with by the amendment brought about by a newly substituted section 64(1) with effect from 1-4-1976 by section 13 of the Taxation Laws Amendment Act, 1975. As pointed out in the order of the Tribunal relied on by the assessee, neither the Notes on Clauses accompanying the said Taxation Laws Amendment Bill nor the Select Committee Report gives any reasons as to why the reference to the membership of the parent also in the firm in which the minor derives the benefit was omitted by the amendment and it is difficult to know the mischief which is sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'income' and as a corollary the 'total income' would comprehend a negative figure or loss, and even if a parent has such a negative income or loss from any of the sources the provisions of section 64(1)(iii) for inclusion of the minor's share income from the firm will be attracted or not, need not engage our attention in these appeals because even assuming that section 64(1)(iii) would be attracted in such a case of negative income or loss being determined as 'total income' in the hands of the parent, it necessarily pre-supposes the existence of a separate source of income of the parent under which any positive income or loss is or can be determined. None of the appeals before us involves a case where the assessee has or had during the relevant previous year any particular source of income and the computation of income therefrom resulted in a negative figure. Even assuming that the object of the provision is to circumvent attempts of persons to divert their income or source of income so as to avoid heavy burden of tax and in such circumstances to ignore the effect of the transfer or diversion and to aggregate all the income including the diverted income in the hands of a parent ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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