M.C. Agarwal, J. - (1.) THE Income-tax Appellate Tribunal 'A' Bench, Allahabad, has, under Section 256(1) of the Income-tax Act, 1961 (herein after referred to as "the Act"), referred the following question for the opinion of this court : "Whether, on a true construction of Section 64(1)(iii) of the Income-tax Act, 1961, the Income-tax Appellate Tribunal was right in taking the view that the income arising to the minor sons of the assessee as a result of their admission to the benefits of partnership is liable to be included and assessed in the hands of the assessee notwithstanding that the assessee had no income of her own from any source whatsoever to which the income earned by the minor could be included ?"
(2.) THE relevant facts are that one Sri Narendra Kumar was a partner in a firm styled as Messrs. Malik Chemical Works, Bulanala, Varanasi. THE said Sri Narendra Kumar died leaving behind him the present assessee as his widow and five minor sons, namely, Ashok Kumar, Rakesh Kumar, Rajesh Kumar, Rajendra Kumar and Surendra Kumar. After the death of the said Sri Narendra Kumar, the aforesaid minors were admitted to the benefits of the said partnership firm. THE present assessee was not a partner in the said firm. The present proceedings relate to the assessment years 1976-77, 1977-78 and 1978-79, for which action under Section 148 of the Act was initiated by the Assessing Officer intending to assess the income accruing to the aforesaid minors from their admission to the benefits of the partnership firm aforesaid as, according to the Assessing Officer, the said income was assessable in the hands of the present assessee by virtue of the provisions of Section 64(1)(iii). The assessee contended that she had no income of her own from any source and, therefore, there was nothing to which the share income of the minors may be included and, therefore, the said provision of law could not be invoked in her case. This contention was negatived by the Assessing Officer, but was accepted by the Appellate Assistant Commissioner of Income-tax. The Revenue then went to the Income-tax Tribunal and the contention of the Assessing Officer was upheld. That is how, at the instance of the assessee, the present reference has been made. The relevant portion of Section 64 reads as under : "64(1). In computing the total income of any individual, there shall be included all such income as arises directly or indirectly--. . . (iii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm." Admittedly, the minor children of the assessee have been admitted to the benefits of the partnership firm and, therefore, their income has to be included in computing the total income of the assessee. The assessee's contention, however, is that the language used in Section 64(1) shows that an assessee should have some other income of her own to which the income of the nature referred to in the aforesaid Sub-clause (iii) could be added. According to learned counsel for the assessee, since admittedly the assessee has no other income of her own, there is nothing to which the share income of the minors can be included.
(3.) SUCH a contention is not being raised for the first time before this court. It has already been raised before several other High Courts and rejected. This contention was raised in a writ petition before the Hon'ble Andhra Pradesh High Court in Sivalal Sogaji, In re [1983] 140 ITR 39. It was rejected in a brief judgment observing that there is no ambiguity in the language of Section 64(1)(iii) of the Act so as to support the distinction sought to be drawn by learned counsel for the assessee on the ground that such minor's income can be included in the individual assessee's income only in case the assessee has, as an individual, income above the taxable limit. It was also observed that this provision was enacted to bring all such income to tax with a view to plug evasion of tax by the assessees by transferring assets to minors or by deriving income admitting the minors to the benefits of partnership in a firm. Again, in CIT v. G. Gopal Rao [1985] 151 ITR 308, the same High Court had an occasion to consider a similar argument in a reference made by the Income-tax Appellate Tribunal under Section 256(1) of the Act. As in the case before us, Gopal Rao too had no income of his own. The contention put very strenuously before the court was that, in such a situation, Section 64(1)(iii) could not be applied. The reference was answered in favour of the Revenue and it was held that the income arising to the minor children of an individual on their admission to the benefits of a partnership firm is includible in the total income of such individual under Section 64(1)(iii) of the Act notwithstanding the fact that such an individual has no total income at all from any other source. The same view was taken by the Karnataka High Court in CIT v. L.N. Horkeri [1986] 162 ITR 513, by the Patna High Court in CIT v. Rameshwarlal Jawanpuria [1992] 197 ITR 606, by the Orissa High Court in CIT v. Sanyasi Mohapatra [1991] 188 ITR 602 and the Madhya Pradesh High Court in CIT v. Shri Manakram [1990] 183 ITR 382.;