Law:

Section:

Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse, etc. - Assessment year 1978-79 - Assessee's minor son was admitted to benefits of partnership, on death of assessee's husband who represented Hindu undivided family (HUF) in partnership firms - Share income received from said firms by minor was clubbed by Assessing Officer in assessee's income on ground that minor could not represent joint family in any firm and that share income derived by him belonged to him in his individual capacity and was assessable in individual hands of his mother under section 64 - Whether share of benefit offered to minor was not for any service rendered by him, but in lieu of investment of HUF funds in business - Held, yes - Whether, therefore, income received by minor by way of admission to benefits of partnership firm related to investment of HUF funds and was to be treated as income of HUF and not of individual minor, and same would not be included in income of assessee under section 64(1)(iii) - Held, yes FACTS The assessee's husband was a partner, representing the HUF in two firms. The assessee's husband died and thereafter his minor son was admitted to the benefits of the partnership, through his guardian, mother-assessee, by investing a certain amount, out of the amount, standing to the credit of the HUF in both the firms. The ITO clubbed the share income received from said firms by the minor in the income of the assessee on the ground that no minor could represent any joint family in any firm and that the share income derived by him belonged to him in his individual capacity and was assessable in individual hands of his mother under the provisions of section 64. On appeal, the Appellate Assistant Commissioner confirmed the view of the ITO. On further appeal, the Tribunal held that there was no bar for the minor to represent the joint family, that there was a direct nexus between the family funds and the share income earned by the minor and, hence, the same should be assessed in the hands of the HUF, represented by the minor. On reference : HELD The share of benefit offered to the minor was not for any service rendered by him, but in lieu of…

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