1984 (4) TMI 65

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..... the Income-tax Act, 1961 (' the Act ') in respect of interest income earned by the minors. 2. The assessee is an individual. The assessment year is 1976-77 and the relevant previous year ended on 31-3-1976. 3. The assessee's two minor sons, Udayan and Viren, were admitted to the benefits of partnership of two firms, namely Mukund Bros. and Ambica Cut Piece Store. His minor daughter Chhava wa .....

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..... he income-tax authorities were not justified in including the interest earned by the minors in the total income of the assessee by invoking the provisions of section 64(1)(iii). In this connection he placed before us copies of the accounts of the minors in the said two firms at well as deeds of partnership of the said two firms with a view to impress upon us that the capital standing in the names .....

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..... the learned counsel for the assessee relied on the decision in the cases of S. Srinivasan v. CIT [1967] 63 ITR 273 (SC) and CIT v. Smt. Triveni Devi [1971] 81 ITR 511 (All.). The learned representative for the department, on the other hand, strongly relied on the orders of the income-tax authorities and justified their action. He also invited our attention to the copies of the accounts of the mino .....

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..... been admitted to the benefits of partnership would be includible in the total income of his parent(s). It appears to us that in number of cases the assessees are taking a stand that as far as the interest earned by the minors is concerned, the provisions of section 64(1)(iii) are not attracted. However, they have failed to notice the amendment brought in clause (iii) of sub-section (1) of section .....

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..... e with effect from 1-4-1976 the provisions of clause (iii) would be applicable irrespective of whether the assessee's minor children are allowed a share in the firm without any contribution on their part to the capital or assets of the firm or whether they bring their own capital or become members of the firm in their own right. Again, in our view, the provisions of clause (iii) are absolute and u .....

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