Law: Income Tax Act, 1922

Section: 16(3)

(a) Income Tax Act (XI of 1922)--S.16(3)---Income of a minor could only be assessed in the hands of his parent if it was shown that said income was derived directly or indirectly from the voluntary admission of the minor to the benefits of a partnership firm of which his parent was also a partner---Where share in partnership devolved upon the minor through inheritance, the minor could not be said to have been admitted to the partnership within the meaning of S.16(3)(a)(ii) of the Act. A bare reading of section 16(3), Income Tax Act, 1922 would show that income of a minor can only be assessed in the hands of his parents if it is shown that the said income was derived directly or indirectly from the admission of the minor to the benefits of a partnership firm of which his parent is also a partner. Clause (a)(ii) of section 16(3) of the Income Tax Act, 1922 clearly postulates a voluntary act on the part of the minor or his parent admitting him to the benefits of partnership of a firm of which the parent is a partner. It does not appear to have any application to situation where share in partnership devolves upon the minor through inheritance as in that case the minor cannot be said to have been admitted to partnership within the meaning of the aforesaid provision. Commissioner of Income Tax, Madras v. K.M.S. Lakshmanier 9 ITR 668 and H.C. Mehra v. Commissioner of Income Tax, Bihar and Orissa Tax (1966) 59 ITR (Sh.N.) 16 distinguished. Commissioner of Income Tax, Madras v. K.M.S. Lakshmanier 9 ITR 668 ref. (b) Income Tax Act (XI of 1922)--¬ ----S.16(3)---Object of S.16(3). Commissioner of Income Tax, Madras v. K.M.S. Lakshmanier 9 ITR 668 fol. JUDGMENT M. MEHBOOB AHMAD, CJ .----The learned Income Tax Appellate Tribunal has referred to this Court the following question of law under section 136(1) of the Income Tax Ordinance, 1979 for its opinion:---- "Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the income of the minor children could not be clubbed in the income of the assessee under section 16 of the (now repealed) Income Tax Act, 1922"? 2. The necessary facts are that Muhammad Zaki deceased husband of Mst.…

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