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TMI Blog2004 (9) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit Loss Account of the said business, the assessee has debited Rs. 92,217 being interest paid to his minor son Mst. Sandeep Bajaj and the same was shown as interest payable in the balance sheet. During the year under reference, a sum of Rs. 13,800 was paid as interest to Mst. Sandeep Bajaj and the same was clubbed along with the income of the assessee in accordance with the provisions of section 64. The Assessing Officer treated the entire interest payable by the assessee though not paid to his minor son as income accruing to the minor son on the ground that the assessee cannot follow different system of accounting in his own case. He accordingly treated the difference between Rs. 92,217 claimed as interest expenses being interest paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was accepted. The assessee and his minor son are two different assessees in the eyes of law. A minor is a separate legal entity by himself having his own rights. The income is clubbed under the provisions of section 64. The law is well settled that even the same assessee can follow different methods of accounting in respect of different sources of income received under the respective heads. Further in the case of business income, the assessee may follow mercantile system of accounting whereas in respect of other sources, the assessee has the liberty to follow cash system of accounting. Even in the case of two different businesses, say one profession and other trading, the assessee can follow cash system of accounting for professional in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered rival submissions and relevant facts of the case. Under the Income-tax Act, section 5 determines the scope of total income. As per section 5, total income is determined with reference to different residential qualification of the assessee. As per section 5, the total income is to be computed subject to the provisions of Income-tax Act. The income under the head 'profits and gains of business' and income under the head 'income from other sources' is computed as per the method of accounting regularly employed by the assessee. Though under section 64(1A), the income of minor child is to be included in the total income of his parents, the minor child is basically to be an assessee. Thus he can follow his own method of accounting. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984] 146 ITR 627. Hon'ble AP High Court in the case of CIT v. Segu Harinath [1988] 171 ITR 318 considered similar situation on facts of the case Hon'ble High Court held that: "While section 64(1)(iii) authorizes the inclusion of the share income of the minor child, it obviously refers to the share income determined in the hands of the minor child by applying all the provisions of the Act. In that view of the matter, where a minor is admitted to the benefits of a partnership and monies are borrowed on behalf of the minor for investment in the partnership firm, the share income of the minor, which would be taggable with the income of the father or mother, as the case may be, is to be determined after deducting interest, as per section 67(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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