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TMI Blog1985 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... e and her husband are partners in three firms. By invoking section 64 of the Income-tax Act, 1961 ('the Act') the ITO has clubbed the share income of the husband in the assessee's hands as the income of the assessee is higher than that of her husband (Explanation 1 to section 64). The husband of the assessee has paid life insurance premium. The deduction under section 80C of the Act has, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own hands, should also be made available to the second person in whose hands such income is included. The learned departmental representative, on the other hand, submitted that section 64 does not provide for inclusion of total income but income arising to the spouse from the partnership firm, assets transferred, etc. Therefore, only that income which is computed under a particular head after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance premium paid by the husband. 3. We have given careful thought to the arguments advanced by both sides. As rightly stressed by the learned departmental representative, income specified in section 64 is to be included in the hands of the spouse or the transferor, as the case may be. It does not refer to the total income. The first stage would be to determine the income arising to the spouse un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case unless she herself pays the life insurance premium. 4. Our attention was also drawn to the distortion introduced by Explanation 1 to section 64. In the present case, if the income of the husband had been more than that of the wife, then the wife's income would have been included in the hands of the husband and relief under section 80C would have been available to the husband. It might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um and the deduction is not influenced by the transportation of income from one person to another. It is true that the Explanation introduces certain anomalies in the matter of granting of deduction under section 80C and the variations in the income from year to year might shift the deduction under section 80C from one person to another alternatively. But it is for the Legislature to remedy this s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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