Law:

Section:

Section 64(1)(iii) of the Income-tax Act, 1961 - Transfer of assets - For benefits of spouse or minor child - Minor son of assessee was admitted to benefits of a partnership firm - For assessment year 1976-77, the minor earned interest on capital invested by him in said firm - Whether interest earned by minor was includible in income of assessee under section 64(1)(iii) especially when such income had arisen to minor only due to his admission to benefits of partnership - Held, yes Facts The minor son of the assessee was admitted to the benefits of partnership in a firm. During the accounting period relevant to the assessment year 1976-77, the minor received a sum of Rs. 3,028 as interest on the capital invested by him in the said firm. The ITO clubbed the said amount of Rs. 3,028 with the income of the assessee under section 64(1)(iii). On appeal, the Tribunal upheld the order of the ITO. On reference : Held In view of the decision of this Court in the case of CIT v. Smt. Nirmala Devi [1987] 166 ITR 253 , in the instant case the sum of Rs. 3,028 earned by the minor son on the capital invested by him in the partnership firm was an income which arose to the minor due to his admission to the benefits of the partnership firm and was, thus, includible in the total income of the assessee under section 64(1)(iii ). Case referred to CIT v. Smt. Nirmala Devi [1987] 166 ITR 253 (MP). ORDER Sohani, Actg. CJ.-By this reference under section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal, Indore Bench has referred the following question of law to this Court for its opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 3,028 earned by the minor on the capital invested by him in the partnership firm to the benefits of which he has been admitted, is an income, which arises to the minor from his admission to the benefits of a partnership firm and was rightly included in the income of the assessee under section 64(1)(iii) of the Income-tax Act, 1961 ?" 2. The material facts giving rise to this reference, briefly, are as follows: While framing assessment of…

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