INCOME TAX ACT, 1961

Section 64(1)(iii)

Clubbing of income - Assessment of share income of two minor sons, including the interest in hands of their father in assessment year 1976-77 - Effect of amendment making such income taxable in the hands of their father, came into effect from 1-4-1976 -

Tribunal made instant reference to High Court under section 256(1) on following substantial question of law: 'Whether, Tribunal was justified in holding that share income of the two minor sons of assessee, including the interest was assessable in hands of the assessee their father, in assessment year 1976-77 under section 64(1)(iii) of the IT Act 1961, as amended by the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976, when the accounting year of the firm ended on 31-12-1975'. Held: In view of the observations made by a three-judge Bench of Court in Loknath Goenka v. CIT, share income of the firm including the component of interest of two minor sons, would not be assessable in hands of their father, assessee in assessment year 1976-77 under section 64(1)(iii), since the amendment making such income taxable in the hands of their father, came into effect from 1-4-1976, the period prior to the accounting year ending on 31-12-1975.

Followed:Loknath Goenka v. CIT 2019 TaxPub(DT) 5372 (Pat-HC).

REFERRED : Badri Prasad v. CIT (1990) 185 ITR 307 (Pat-HC) : 1990 TaxPub(DT) 926 (Pat-HC), Karimtharuvi Tea Estate Ltd. v. State of Kerala (1966) 60 ITR 262 (SC) : 1966 TaxPub(DT) 296 (SC), Keshav Mills Co. Ltd. v. CIT (1965) 56 ITR 365 (SC) : 1965 TaxPub(DT) 263 (SC), Kesoram Industries and Cotton Mills Ltd. v. CWT (1966) 59 ITR 767 (SC) : 1966 TaxPub(DT) 256 (SC), Premier Breweries Ltd. v. CIT (2015) 372 ITR 180 (SC) : 2015 TaxPub(DT) 995 (SC), Rameshwar Prasad Bagla v. CIT (1973) 87 ITR 421 (SC) : 1973 TaxPub(DT) 343 (SC) and Sarathy Mudaliar, (C. P.) v. CIT (1966) 62 ITR 576 (SC) : 1966 TaxPub(DT) 0373 (SC).

FAVOUR : In assessee's favour.

A.Y. : 1976-77

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