Law:

Section:

Section 64(1)(i) of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse or minor child - Assessee and his wife were partners in a firm engaged in running a hospital - Being qualified doctors they were to contribute their professional services for running that hospital - Third partner was assessee's father who was not a doctor by profession but had provided investment capital for building, equipments, etc. - Whether merely for reason of joinder of assessee's father as a partner, firm was rendered as carrying on a business falling under section 64(1)(i) - Held, no -Whether income derived by assessee's wife from that firm was to be aggregated with assessee's income - Held, no Facts The assessee and his wife were both doctors by profession and were partners in a firm. The third partner was the assessee's father who was not a doctor by profession. The objects of the firm were to carry on general medical practice including surgery and for that purpose to run a medical dispensary and do all other activities conducive to the proper conduct of a pucca hospital. The assessee's father had invested capital for land, building, equipments, etc. The assessee and his wife being qualified doctors were to contribute their professional services for running the hospital. The assessee's father was incharge of the accounts and registers and other documents relating to the partnership. The firm was to be managed by the assessee and he was to be incharge of all matters relating to the administration of the hospital. The assessee and his father were each entitled to 45 per cent of the net profits of the firm. The assessee's wife was entitled to the remaining 10 per cent besides a fixed remuneration at the rate of Rs. 500 per mensem. For the relevant assessment years, the ITO held that the firm was carrying on a business in which both the assessee and his wife were partners and the income derived by the wife from the firm was to be aggregated with the income of the assessee under section 64(1)(i). On appeal, the Tribunal held that for the reason of joinder of the assessee's father as a partner of the firm it could not be said that the firm was one carrying on a…

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