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TMI Blog2005 (2) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 under section SOL against his own income. 4. The Assessing Officer vide order dated 30-1-1998 processed the return of income under section 143(1)(a) and in 'Adjustment explanatory Sheet' he made prima facie adjustment whereby he disallowed deduction of Rs. 30,000 claimed under section 80L (at the rate of Rs. 15,000 per minor child) observing as under:- "The assessee claim under section 80L of the IT Act up to the extent of Rs. 30,000 is in excess of the limit specified in section 80L of the Act. That is, the separate claim under section 80L in respect of minors' income from specified investments is prima facie disallowable as the expression used in section 64(1A) of the IT Act is "such income" and not total income/taxable income of the minor(s). Hence, the excess claim to the extent of Rs. 30,000 is disallowed." 5. For the assessment year 1998-99 also, the Assessing Officer, while processing the return of income, disallowed the deduction under section 80L out of two minor children's income clubbed by the assessee under section 64(1A) of the Act. The disallowance for the assessment year 1998-99 is Rs. 24,000 because in this year the assessee claimed deduction under section 80L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to assessment year 1976-77 regarding clubbing of income of wife under section 64(1A) in the hands of husband. The learned DR submitted that as per the provisions contained in section 64(1)(A) for and from the assessment order 1993-94 minor child ceases to be an assessee unless child is suffering from a disability of the nature as specified in section 80U of the IT Act or income arises or accrues to minor child on account of: (a) manual work done by him; or (b) activity involving application of his skill, talent or specialized knowledge, as provided in proviso to section 64(1A) of the Act 8. The learned DR accordingly concluded that as per provisions contained in section 64(1A) of the Act all income arising or accruing to a minor child is required to be clubbed subject to the exclusion provided in section 10(32) of the Income-tax Act, 1961. 9. Shri A.V. Sonde, Authorized Representative, appearing for the assessee supported the order of the CIT(A). The learned Counsel for the assessee submitted that the assessee was entitled to deduction in respect of each of minor child under section 80L of the IT Act whose income is included in the total income of the assessee. This is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the assessment year was correctly made by the Assessing Officer. 11. We have heard both the sides and carefully gone through the orders of the authorities below and relevant provisions contained in the Income-tax Act, 1961. Prior to omission of clause (v) of section 64(1), by the Finance-Act, 1992 with effect from 1-4-1993 income of minor child could be clubbed from assets transferred directly or indirectly to minor child by such individual otherwise for inadequate consideration. In view of this omission sub-section 1(A) was inserted by the Finance Act, 1992 with effect from 1-4-1993 to section 64 which reads as under:- "In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child not being a minor child suffering from any disability of the nature specified in section 80U. Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any- (a) manual work done by him; or (b) activity involving application of his skill, talent or specialized knowledge and experience." 12. With effect from 1-4-1993 by the Finance Act, 1992 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income is greater. Once clubbing of minor's income is done with that of one parent, it will continue to be clubbed with that parent only, in subsequent years. The Assessing Officer may, however, club the minor's income with that of the other parent if, after giving the other parent an opportunity to be heard, he is satisfied that it is necessary to do so. Where the marriage of the parents does not subsist, the income of the minor will be includible in the income of that parent who maintains the minor child in the relevant previous year. The Act has also inserted clause (32) in section 10 of the Income-tax Act, to provide that in case the income of an individual includes the income of his minor child in terms of section 64 of the Act, such individual shall be entitled to exemption of one thousand five hundred rupees in respect of each minor child if the income of such minor as includible under section 64 exceeds that amount. However, where the income of any minor so includible is less that one thousand five hundred rupees, the aforesaid exemption shall be restricted to the income so included in the total income of the individual. The provision is to provide relief to the indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience. 17. In the present case, income is not derived by minor from manual work or any activities involving his skill, talent or specialized knowledge or experience. Therefore, whatever income [excluding deduction permissible under section 10(32) of the Act] included by the assessee himself under section 64(1A), the assessee is entitled to deduction under section 80L. 18. From the aforesaid provisions of law it is clear that with effect from 1-4-1993, there is no room for doubt or debate regarding disallowance of separate deduction under section 80L out of income of minor clubbed in the case of parent(s). Various case laws relied by the Learned Counsel for the assessee are not applicable because either they pertain to assessment year prior to 1993-94, insertion of section 64(1A) of the Act or regarding allowance of deduction which are to be allowed for computing the income under a particular head of "income" for example the decision of Karnataka High Court in the case of S.K. Nuyak the issue was regarding allowance of standard deduction for the purpose of including income from salary of spouses in the hands of husband (assessee). 19. For the aforesaid reasons, we hold that prima ..... X X X X Extracts X X X X X X X X Extracts X X X X
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