V.G. Oak, C.J. - (1.) THIS is a reference under Section 256 of the Income-tax Act, 1961 (hereafter referred to as "the Act"). Smt. Triveni Devi is the assessee. The assessment year is 1962-63. She was assessed by the Income-tax Officer in due course. When the assessment came up for consideration before the Appellate Assistant Commissioner, he noticed that no action had been taken with respect to the assessee's minor son, Prem Prakash, who had been admitted to the benefits of partnership of a firm. The Appellate Assistant Commissioner, therefore, issued a notice of enhancement proposing the inclusion of the share of the minor in the assessment of Smt. Triveni Devi. The assessee protested, and further submitted that in any case interest amounting to Rs. 5,561 received by the minor from the firm was not includible under Section 64(i) of the Act in the assessee's income. THIS last submission was accepted by the Appellate Assistant Commissioner. The sum of Rs. 5,561 received by the minor son as interest was not included in the assessee's income. The Income-tax Officer, Kanpur, appealed against the appellate decision of the Appellate Assistant Commissioner. It was urged for the department that the sum of Rs. 5,561 earned by the minor as interest ought to be included in the mother's assessable income. The contention was not accepted by the Appellate Tribunal. The appeal was dismissed.
(2.) AT the request of the Commissioner of Income-tax, U.P., the Appellate Tribunal, Allahabad, has referred the following question of law to this court: "Whether, on the facts and in the circumstances of the case, the interest of Rs. 5,561 paid to the minor by the firm was rightly excluded from the assessment of the assessee under Section 64(i) of the Act ?" The department relies upon Section 64 of the Act. Section 64 deals with the income of an individual so as to include the income of spouse, minor child, etc.; Section 64 states : "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 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." Apparently, the department relied upon Clause (ii) of Section 64 of the Act. The question referred by the Tribunal mentions Clause (i) of Section 64 of the Act.
(3.) IN Bhogilal Laherchand v. Commissioner of INcome-tax, 1954 25 ITR 523 the partnership deed did not cast any obligation upon minors to maintain any deposits in the firm. The question arose whether interest which minor partners had received on deposits standing to their credit in the firm could be included in the total income of the assessee under Section 16(3)(a)(ii) of the INdian INcome-tax Act, 1922. It was held by the Bombay High Court that the interest earned by the minors could not be included in the income of the assessee. In Chouthmal Kejriwal v. Commissioner of Income-tax, 1961 41 ITR 570 it was held by the Assam High Court that where a minor has been admitted to the benefits of partnership in a firm in which his father is a partner, and the minor has supplied capital, any income accruing to the minor as interest on the capital is an indirect result of his being admitted to the benefits of partnership, and has to be included in the total income of his father under Section 16(3)(a)(ii) of the Indian Income-tax Act, 1922.;