Law:

Section:

Section 64(1)(iii) of the income-tax act, 1961-Transfer of assets-For benefit of spouse or minor child, etc. - Whether income of assessee's minor sons is including in assessee's income under section 64(1)(iii) only if individual income of assessee is above taxable limit-Held, no FACTS The assessee returned an income comprising mainly of share income earned by his three minor sons from their admission to the benefits of partnership in a firm, which income was included by the assessee in his return in view of section 64. The assessment was completed by the ITO on that basis. Subsequently, the assessee filed an application under section 154 for rectification of the assessment order by deleting the income of the assessee's minor sons from the assessee's income on the grouad that section 64(1)( iii) is applicable only if the assessee's individual income as such is above the taxable limit. The ITO dismissed this application. On appeal, however, the AAC accepted the assessee's contention. On further appeal, the Tribunal set aside the order of the AAC on the short ground that upon an application under section 154 only a rectification of the quantum of tax liability can be ordered and no income originally included in the taxable income can be excluded. The Tribunal did not express any opinion on the main contention of the assessee. On writ: Held Section 64(1)(iii) directs the inclusion of such income as arises directly or indirectly to a minor child of the assessee from the admission of the minor to the benefits of partnership in a firm. In the matter of such computation, no distinction is made on the basis whether the individual assessee has, on his own account, income above or below the taxable limit. There is no ambiguity in the language of section 64(1)(iii ) so as to support the distinction sought to be drawn by 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. There is no warrant to draw such a conclusion either on the wording of section 64(1)(iii ) or on any principle of law. The order of the ITO was, therefore, justified not only…

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