1984 (2) TMI 108

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..... e assessee acting under the relevant provision of section 64 of the Income-tax Act, 1961 ('the Act'). 3. The assessee appealed to the AAC. It was submitted before him that it was clause (iii) of section 64(1) which was applicable to the case. According to this clause, in computing the total income of an individual all such income as arose directly or indirectly to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm was to be included. It was, therefore, submitted before the AAC that the income of the minor was to be included only in the income of his father and not in the income of the assessee who was his grandfather. On this basis, the AAC deleted the addition. 4. The department is .....

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..... could either be assessed in the hands of his father under clause (iii) of section 64(1) or under clause (vi) of the above section. His contention was that clause (iii) covered all the cases and the income arising to a minor child from his admission to the benefits of partnership of a firm required to be assessed in the hands of his father in preference to its assessment in the hands of any other person. 6. We have carefully considered the submissions placed before us. We agree with the first submission of the learned counsel for the assessee without pronouncing any decision on the second submission. The principle laid down by the Supreme Court in the case of Prem Bhai Parekh directly applies to the present case. In the cited case also the .....

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..... e gift it does not arise as a result of the gift. Secondly, the income arises only because the other partners had agreed to take the individual's wife as a partner and had allowed her to contribute to the capital of the firm. This is also not a result of the gift. The income from share of profits in the firm arising to the individual's wife cannot, therefore, be included in the total income of the individual under the provisions of section 64(iii)." Similar finding was also given by the Madras High Court in the case of S. Chandappa Iyer in which the principles laid down in the cases of Prembhai Parekh and Prahladrai Agarwala were applied. Following the principles given in the above cases, we hold that it cannot be said that the income to .....

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