Law:

Section:

Section 64 of the Income-tax Act, 1961 (Corresponding to section 16(3) of the Indian Income-tax Act, 1922), read with Entry 82 of List I of Seventh Schedule of the Constitution - Transfer of assets For benefit of spare etc. - Whether when incidence of tax does not fall on person to whom income had accrued in first instance but on someone else, it is nonetheless 'income' within purview of Entry 54 of Government of India Act, 1935, corresponding to Entry 82 of List I of Seventh Schedule of present Constitution - Held, yes - Whether aim of section 64 of 1961 Act is prevention of evasion of tax for which purpose also section 16(3) was introduced in Act of 1922, and, thus, it cannot be said that section 64 of 1961 Act is unconstitutional as being outside scope of Entry 82 of List I of Seventh Schedule - Held, yes FACTS One 'H' died in February, 1954, leaving behind his two widows, sons, daughters and an aged mother as also his lucrative business. On his death, his business devolved on his heirs-at-law. On 4-5-1954, a deed of partnership was executed amongst the heirs and the minor children of 'H' were admitted to the benefits of this partnership. That partnership existed till the date of death of H's mother in July, 1954. Thereafter, a fresh partnership was entered into between the heirs of 'H' and those of his mother on 21-6-1958. This time also the minors were admitted to the benefits of the partnership. On both the occasions, the partnership was registered under section 26A of the 1922 Act. While things stood thus, 1961 Act came into operation on 1-4-1962. Pursuant to the section 64 of 1961 Act, two orders of assessment were issued by the concerned ITO provisionally clubbing the income of the minor children of each of the widows to their respective incomes. In instant writ petition, section 64 of the 1961 Act was assailed as being ultra vires of the Indian Parliament. It was contended that legislation is not ascribable to the relevant Entry in List I of the Seventh Schedule annexed to the Constitution. HELD In deciding what the import of the expression "income" in entry 82 of List I of Seventh Schedule of the Constitution is, it should be remembered at the outset…

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