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TMI Blog1971 (3) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly included in the income of the assessee under section 64 of the Income-tax Act, 1961?" The facts giving rise to this reference are that the assessee, Kaladhar Prasad, is a partner in a firm known as Messrs. Kaladhar Prasad and Sons and his three minor sons, namely, Rakesh Kumar, Updesh Kumar and Lokesh Kumar, were admitted to its benefits. While making assessment for the year 1962-63, the Income-tax Officer included in the assessee's income, the share of profit of minor partners in the firm amounting to Rs. 4,736. This amount included an amount of Rs. 1,627 credited to the account of the minors as interest. In appeal the assessee did not object to the inclusion of the share income of the three minors, in the total income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The minors were not liable to provide any capital. The money credited in the names of the partners was to be deemed to be capital of the business and money credited in the names of the minors was to be their deposit with the firm. On such capital or deposits of the partners or minors, interest at the rate of 6% was payable by the firm. The deed further recited that the three minors who had been admitted to the benefits of the firm were to get one anna share in the profits of the firm. It was in pursuance of the agreement between the parties that the accounts of the minors were credited with certain amount of profits and interest on credits outstanding in their names earned by the minors during the relevant year. The Income-tax Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act. In its opinion, the facts of the present case are distinguishable from the facts of the case of Bhogilal Laherchand v. Commissioner of income-tax and are akin to those of Choitthmal Kejriwal v. Commissioner of Income-tax. The two cases, Bhogilal Laherchand and Chouthmal Kejriwal were noticed by the Supreme Court in the case of S. Srinivasan v. Commissioner of Income-tax. In that case a question arose whether interest paid to a minor on accumulated profits was earned by him directly or indirectly by his admission to the benefits of the partnership firm. While discussing the question involved in that case, the learned judges distinguished the case of Bhogilal laherchand on the ground that the facts of that case were not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing its work. According to him, all these circumstances indicate that the amount standing in the name of the minor was the capital contributed by him. So far as the circumstance that the account standing in the name of a minor was treated in the same manner in which the account standing to the credit of the adult partners was treated is concerned, we find that the only treatment meted out to the account standing to the credit of the minors was that the share of profits earned by them from business as also the interest on the credits standing in their names were added to their account from time to time. Such treatment of the account by itself does not provide any basis for determining whether the original credit in the name of a minor rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the revenue are quite consistent with the position that the amount standing to the credit of the minors were in the nature of their deposits. They do not detract from the clear intention of the parties as indicated in the partnership deed. Whatever may have been the position, had there been no such clear recital about the intention of the partners in the partnership deed, the circumstance pointed out by the learned counsel for the revenue neither singly nor cumulatively show that the amount standing to the credit of the revenue was introduced in the firm as capital and not as deposit by the minors. There is absolutely no reason to conclude that clause (4) of the partnership deed did not represent the real intention of the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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