B. P. Jeevan Reddy, J. - (1.) A conflict of opinion among the High Court on the meaning and interpretation of Clauses (i) and (ii) of sub-section (1) of Section 64 (as they stood prior to 1st April, 1976) of the Income-tax Act, 1961 falls for resolution in this batch of appeals. Prior to April 1, 1976 the said clauses along with the explanation read thus:"(1). In computing the total income of any individual, there shall be included all such income as arises directly or indirectly- (i) to the spouse of the such individual from the membership of the spouse in a firm carrying on a business in which such individual is a partner; (ii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner; Explanation:-For the purpose of clause (i) the individual, in computing whose total income the income referred to in that clause is to be included, shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of Clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding and income referred to in that clause) is greater, and where any such income is once included in the total income of either spouse or parent, any such income arising in any succeeding year shall not be included in the total income of the other spouse or parent unless the Income-tax Officer is satisfied, after giving that spouse or parent an opportunity of being heard, that it is necessary so to do."
(2.) We may make it clear, at the outset, that whatever we say hereinafter is relevant only to the aforesaid provision contained in Clauses (i) and (ii) of Section 64(1), i. e., to clauses (i) to (ii) as they obtained prior to April 1, 1976.
(3.) The sub-section opens with words "in computing the total income of any individual", and provides for incision of the income arising directly or indirectly to persons specified in the sub-section, in the situation specified therein, in the total income of such individual. Clause (i) says that where the spouse of an individual is the member of a firm wherein the individual is a partner, the income of such spouse shall be included in the income of that individual. The Explanation contained in Sub-section (i) says that among the spouses, the income of the spouse with lesser income shall be included in the income of the spouse having larger income. It does not matter whether the individual in whose income the income of the spouse is included is husband or wife. Clause (ii) says that if the minor child of such individual is admitted to the benefits of the partnership firm, in which such individual is a partner, the income arising to such minor child shall be included in the income of such individual. The Explanation clarifies that where both the mother and father of a minor child are partners in the firm (to benefits of which such minor child is admitted), the income of the minor child shall be included in the income of that parent whose total income (excluding the income referred to in clause (ii) is greater.;