9911796707
TMI Blog1984 (7) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... from two firms and other sources. For the asst. yr. 1976-77 for which the accounting year ended on 12th April, 1976 the ITO while determining the total income included the share income of minor son, muthiah, minor daughters Seetha and Nagamal from M/s PR. P. PR. Firm Neyveli and share income of minor son Muthiah in M/s PR. P. PR. Firm, Machandupatti. 3. The assessee did not agitate against the clubbing of the share income of the minors with her income but contested the inclusion of interest income from deposits of the minors with the firms on the ground that share income alone was culpable under s. 64(1)(iii) of the IT Act, 1961 and not interest income which has no name to the admission of minors to the benefits of the partnership. This c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative, Smt. Shanbagmmal Ors. vs. CIT (1976) 105 ITR 315 (Mad) has only followed the aforesaid decision of the Supreme Court. 6. We have duly considered the rival contentions and the facts of the case. At the outset it is to be observed that there is not dispute whatsoever as to the clubbing of the minors' share income in the hands of the assessee under s. 64(1)(iii) of the IT Act, 1961. The dispute is limited to the inclusion of interest paid to the minor children admitted to the benefits of the partnership in the two concerns. A perusal of the cl. 5 of the Deed of Partnership dt. 18th March, 1976 of the firm M/s PR.P.PR. Firm at Nachankupatti (Head Office and branch at Palladam) shows the at the minor Muthiah was also required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay interest on current account balances of the partners and it was not free to resort to public borrowings or loans. Therefore, the facts are similar to the facts in the case of Smt. Nripendra Kumari Bhandari (1976) 105 ITR 158 (Mad). In that case no interest was payable or capital account of the minors admitted to the benefits of the partnership but on the excess on capital account or the profits or accretion thereof left with the firm was treated as loan by specific provision in the deed of partnership and on which interest payable was fixed at 7 1/2 per cent. The Madras High Court held that interest was paid to the minors by virtue of their having been admitted to the benefits of the partnership and hence interest income was includible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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