Law: Income Tax Act, 1961

Section: 64

Income-tax----Total income---Inclusions in total income---Constitutional validity of provisions---Section 64(lA) providing for inclusion of income of minor child in total income of parent---Provision is intended to prevent evasion of tax and is not discriminatory---Provision is valid---Indian Income Tax Act, 1961, S.64---Constitution of India, Art. 14---Scope. In order to pass the test of permissible classification under Article 14, the classification must not be arbitrary, artificial or evasive but must be based on some real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved by the Legislature. Section 64(lA) of the Income Tax Act, 1961, was inserted by the Finance Act, 1992, with effect from April 1, 1993, i.e., the assessment year 1993-94. Section 64(lA) now covers all income of the minor (with the exception of earned income) irrespective of the fact whether there is a nexus between the earning of such income and the overt act of the parent. Section 64(lA) is a machinery provision. When provisions are made to block loopholes for any possible tax avoidance, the Legislature is competent to have a wider field of discretion not only for the substantive provision but for procedural provisions as well. Section 64(lA) is a provision for computation of income of an individual whose minor child is having income and that by itself constitutes a different class. Instead of providing a separate slab, it is provided that the income of such minor would be included in the income of the individual. There is no lack of competence in the Legislature for providing such a legislation. The object sought to be achieved is to tax the income and simply because by including the income of the minor in the hand of either of the parents, he or she has been subjected to a higher tax burden, it cannot be considered to be unconstitutional. There is no hostile discrimination between those minors whose income is not included in the income of their parent as they may not be assessable at all or may be assessable at a lower rate of tax as the individuals whose minor children have income have been considered a different class by themselves.…

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