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Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse etc. - Assessment year 1961-62 - Assessee gifted certain assets to his minor son - Son was admitted to benefit of partnership in firm in which assessee was partner and he invested gifted assets in firm - Whether income that fall to share of minor did not arise out of assets transferred by assessee to minor and, therefore, said income could not be included in assessee's income - Held, yes FACTS The assessee had gifted certain assets to his minor son, who invested the same in the partnership firm in which the assessee was a partner. The minor son of the assessee was admitted to the benefits of the partnership. The ITO included the share income of the minor in the hands of the assessee. The Tribunal upheld the order of the ITO. On reference : HELD Following the decision of the Supreme Court in CIT v. Prem Bhai Parekh [1970] 77 ITR 27 , it must be held that the income that fell to the share of the minor, directly or indirectly, did not arise out of the assets transferred to the minor by the assessee. Therefore, the said income was no includible in the hands of the assessee. Note : The case was decided against the revenue. CASES REFERRED TO Commissioner of Income-tax v. Prem Bhai Parekh [1970] 77 I.T.R. 27 (S.C.), Commissioner of Income-tax v. Jwala Prasad Agarwala[1967] 66 I.T.R. 154 (S.C.) and Commissioner of Income-tax v. Keshavlal Lallubhai Patel [1965] 55 I.T.R. 637 ; [1963] 2 S.C.R. 100 (S.C.). JUDGMENT At the instance of the assessee the following question of law has been referred to this court under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for our opinion "Whether, on the facts and in the circumstances of the case, the share income of the minor son from M/s. Ranganatha Silk House is liable to be included in the assessment of the father, i.e., the assessee, under section 64(iv) of the Income-tax Act, 1961 ?" The material facts leading to this reference may be stated : For the assessment year 1962-63 the assessee, G. Ethirajulu, was assessed to tax in the status of individual, on a total income of Rs. 56,669. Subsequent to the completion…

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