Law: Income Tax Act, 1961

Section: 64

Law: Income Tax Act, 1961

Section: 64

Law: Income Tax Act, 1922

Section: 16(3)

Section 64 of the Income-tax Act, 1961 [Corresponding to section 16(3) of the Indian Income-tax Act, 1922] - Transfer of assets - For benefit of spouse etc. - Assessment year 1958-59 - Assessee was partner in a firm which consisted of assessee, his two minor married daughters and their husbands - Whether assessee's married minor daughters could not fall within category of 'wife' under section 16(3)(a)(i) of 1922 Act and they could only be admitted to benefits of partnership - Held, yes - Whether therefore, share income of minor married daughters from firm was assessable in hands of assessee - Held, yes FACTS The assessee was one of the partners of a firm consisting of himself, his two minor married daughters namely 'R' and 'M', and their husbands. The department included the income of the married minor daughters from the firm in computing total income of the assessee. The assessee's contention that the said inclusion was not warranted by section 16(3) of the 1922 Act, was rejected by the Tribunal. On reference : HELD It is evident from sub-clause (i ) of clause (a) of section 16(3) of the 1922 Act that the wife contemplated by that sub-clause is a wife capable of being a member of a partnership. 'R' and 'M' being minors could not fall within that category. The Indian Partnership Act, 1932, makes it quite clear that in order to become a partner the person concerned must be a major according to the law to which the person is subject, and that a minor can only be admitted to the benefits of a partnership According to section 2(6B) of the 1922 Act, the expression "firm", "partner" and "partnership" when used in that Act will have-unless there is anything repugnant in the subject or context "the same meaning respectively as in the Indian Partnership Act, 1932, (IX of 1932) : Provided that the expression 'partner' includes any person who being a minor has been admitted to the benefits of partnership". It is significant that the expression "partner" is not used in connection with the wife in sub-clause (i) of clause (a) of section 16(3) of the 1922 Act. If it had been used, it would have been possible to contend that the proviso is attracted and that the expression…

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