Law:

Section:

Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse, etc. - Assessment years 1981-82 and 1982-83 - Whether in view of Explanation 2A to section 64, share income of minors who were beneficiaries of a trust which was partner in a registered firm had to be clubbed in hands of assessee - Held, yes - Whether trust deed, providing for accumulation of income till minor attained majority, had no relevance - Held, yes FACTS The Tribunal held that the income credited to the minor's account, the trustee having been admitted to the benefit of a partnership firm, was not taxable in the hands of the father solely by reason of the trust deed providing for the accumulation of the income till the minor attained majority. On reference : HELD The Tribunal had failed to take note of the effect of the Explanation 2A to section 64. TheExplanation makes it clear that income is deemed to arise indirectly to the minor from the admission of the trustee to the benefits of the partnership. The mere fact that the minor's right to receive the income is postponed till he attains the age of majority, does not defeat this Explanation. The law deems the income to have arisen indirectly to the minor by virtue of the trustee having been admitted to the benefits of the partnership and the time at which it is to be distributed is of no relevance in this context. The Tribunal was, therefore, not right in law in holding that the share income of the minors who were beneficiaries of a trust which was a partner in a registered firm could not be clubbed in the hands of the assessee under section 64(iii). CASE REVIEW CIT v. Sitalakshmi (Minor) [1996] 217 ITR 595 (Mad.)distinguished. CASES REFERRED TO CIT v. Sitalakshmi (Minor)[1996] 217 ITR 595 (Mad.). Mrs. Chitra Venkataraman for the Applicant. JUDGMENT R. Jayasimha Babu, J. - The assessment years are 1981-82 and 1982-83. This Court in the case of CIT v. Sitalakshmi (Minor) [1996] 217 ITR 595 in circumstances were similar to those in this case, held in favour of the assessee and against the revenue. That decision, however, would not apply to the facts of the case before us, as Explanation 2A to section 64 was incorporated…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492