9911796707
TMI Blog1993 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... trust was created on September 7, 1988, by petitioner No. 1 for the support and maintenance of his wife (petitioner No. 3) as also his minor son and daughter. Petitioner No. 1 has contended that by the aforementioned trust, the petitioner has made a grant of Rs. 7 lakhs in favour of his wife and a further sum of Rs. 7 lakhs each in favour of his two minor children. Petitioner No. 1 allegedly made another trust on February 23, 1992, in favour of his minor children by initially contributing a sum of Rs. 10,000 but subsequently a further sum of Rs. 3,26,000 was contributed for the benefit, support and maintenance of the minors in equal shares. Allegedly, the said trust was created as the minors had given up their rights in terms of a compromis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do." According to the petitioner in terms of the aforementioned provision income of a minor has been clubbed with the income of his parent. According to the petitioner, he did not have tax liability but in terms of the amended provisions the income of a minor child would also be included in the total income of the petitioner. Mr. N. K. Prasad, learned counsel appearing on behalf of the petitioners, has raised a short question in support of this application. Learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of, this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deductible or payable under any provision of this Act." In our opinion, the submissions made by Mr. Prasad cannot be accepted. Entry 82 of List I of the Seventh Schedule to the Constitution of India covers the field of legislation in relation to the matters enumerated therein. The question as to whether the income of a minor will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty of a minor child or a wife can be clubbed with that of the father/husband, there cannot be any doubt that Parliament in its wisdom may make a law in terms whereof an income derived by a minor child can be clubbed for the purpose of assessment of income-tax with the income of one of his parents. In terms of Explanation (1A) appended to section 64 of the Act, the income of a minor shall be included in the income of husband and wife whose total income is greater for the purpose of clauses (i) and (ii) thereof. The Finance Minister also in his speech before Parliament while introducing the said Bill stated thus : "60. It is said that the child is the father of man, but some of our taxpayers have converted children into tax shelters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of India has no substance. As noticed hereinbefore, there are several statutes in terms whereof the properties of a minor are to be clubbed with the properties of his father and, thus, there is absolutely no reason as to why the income of a minor cannot be directed to be clubbed with that of his father. Minors are a class by themselves and, thus, the question of the said Act being ultra vires article 14 of the Constitution does not arise. It is now well known that the discretionary powers of the Legislature to make classification of laws dealing with taxation matters is much wider as compared to other laws. In the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse element ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast successful. It would not shock us in the least to find that the Legislature has determined to put an end to the struggle by imposing the severest of penalties. It scarcely lies in the mouth of the taxpayer who plays with fire to complain of burnt fingers." Reference in this connection may also be made to Ionian Bank Ltd. v. Couvreur [1969] 2 All ER 651 (CA) at pages 655-656, wherein Lord Denning stated : "It seems to me that the whole of the argument of counsel for the defendant depends on whether the documents in February, 1966, were a sham. He relied very much on the words 'apparent alteration' in the paragraph of the defendant's affidavit which I have read. I think he is putting too much weight on the word "apparent". It is quite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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