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TMI Blog2000 (6) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... d book binding at Dhanraj Industrial Estate. In Unit No. 4, he was running the business of book binding in his capacity as an agent of Court receiver, High Court, Mumbai on payment of royalty ₹ 5,500 per month which had to be deposited with the Court receiver. From Unit No. 10A, he was running the business of printing as a proprietary concern, Subramaniam expired on 5-5-1989. Subsequent to death, a dispute arose regarding the inheritance of his property. Brothers of late Subramaniam filed a petition for probate in the High Court claiming that they would succeed to the property as per the will. Late Subramaniam's wife and minor sons filed a caveat objecting to the grant of probate and thus, the matter was converted into a suit bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of assessee-it was the property of the partnership firm. Due to disputes amongst the partners of the firm who were carrying on business from Gala No. 4, official receiver was appointed by the Court and the official receiver had allowed Subramaniam to carry on business from the said premises on payment of certain amount. 5. During the course of assessment proceedings, the Assessing Officer verified the details with regard to the amount offered to tax. She observed that the assessee took the cost of Gala No. 10A at ₹ 3,25,000 whereas the agreement dated 22-1-1982 shows that the property was purchased by her husband, late Subramaniam for a sum of ₹ 3,75,000. According to the Assessing Officer provisions of section 50(1)(ii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce amount was brought to tax by treating the same as long-term capitals gains. The Assessing Officer also clubbed the income of minor children in the hands of the assessee under section 64(1A) of the Income-tax Act. 7. Aggrieved, assessee contended before the CIT(A) that section 50 of the Income-tax Act is applicable only in a case where an asset is part of 'block of assets' during the year of sale and the language of section 50 of the Income-tax Act presupposes existence of the block of assets and continuance of the business whereas Gala Nos. 10A and 4 were no longer part of block of assets at the time of transfer and therefore section 40 has no application. The plea of the assessee did not appeal to the CIT(A) and therefore, she confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation and hence section 50 has no application. On the other hand, the learned Departmental Representative that section 50 is applicable in a case where a particular property was part of the block of assets on which depreciation was claimed earlier. He also adverted our attention to section 176(3A) of the Income-tax Act to submit that the assessee shall be deemed to be carrying on the business and hence, the property continues to be part of the block of assets upto the date of sale. He thus strongly supported the orders of the tax authority. 9. Joining the issues, the learned counsel submitted that section 176(3A) applies to business income whereas in the instant case, Gala Nos. 4 and 10A were sold by parties after they inherited the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act. The case of the Revenue is that after the death of her husband, assessee maintained her children and therefore, the income of the minor children has to be clubbed in her hands. 12. The assessee contended before the tax authorities that the word 'maintenance' has to be understood in the proper perspective. Assessee's minor sons have separate source of income and, therefore, the assessee cannot be said to have 'maintained' her children. The Assessing Officer as well as the CIT(A) rejected the claim of the assessee and, therefore, the assessee is in appeals before us. 13. The learned counsel appearing on behalf of the assessee submitted that soon after the death of Subramaniam, there was litigation and therefore, the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hildren and thus, submitted that Explanation (b) to section 64(1A) is applicable, he further submitted that even Explanation ( a) to section 64(1A) is applicable to the instant case because even after the death of a spouse marriage does not cease to subsist. 15. We have carefully considered the rival submissions. Explanation to section 64(1A) which is relevant herein, is extracted here for the sake of convenience : "Explanation :-For the purpose of this sub-section, the income of the minor child shall be included,- (a)where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or (b)where the marriage of his parents does not subsist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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