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Smt. Priti Lata Samanta Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 594 of 1964
Judge
Reported in[1971]79ITR18(All)
ActsIncome Tax Act, 1961 - Sections 64
AppellantSmt. Priti Lata Samanta
RespondentCommissioner of Income-tax
Appellant AdvocateB.C. Day, Adv.
Respondent AdvocateB.L. Gupta and ;R.R. Misra, Advs.
Excerpt:
- .....which the income from suchassets is for the immediate or deferred benefit of his or her spouse or minorchild (not being a married daughter) or both. explanation.--for the purpose of clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater ;.....' 3. the wordings of section 64 of the act make it abundantly clear that the word.....
Judgment:

H.N. Seth, J.

1. This is a reference under Section 256 of the Income-tax Act, 1961. Smt. Priti Lata Samanta, the assessee, is a widow and a partner in a firm known as Messrs. Students Friends. Her two minor sons were admitted to the benefits of the firm in which the assessee herself is a partners. In the assessment year 1962-63, the Income-tax Officer added the share of the income of the two minor sons in the income of the assessee. The assessee went up in appeal and urged that the word 'individual' as used in Section 64 of the Act refers only to the male of the species as held by the Supreme Court in the case of Commissioner of Income-tax v. Sodra Devi, [1957] 32 I.T.R. 615; [1958] S.C.R. 1 (S.C.) and therefore the Income-tax Officer was wrong in adding the income of the minor sons, derived in the partnership business, in the income of the assessee. The Appellate Assistant Commissioner rejected the plea. The assessee then filed an appeal before the Appellate Tribunal. Before the Tribunal it was conceded that the decision of the Supreme Court in Sodra)Devi's case was under Section 16 of the Income-tax Act of 1922, whereas the present case was governed by Section 64 of the 1961 Act. The wordings of Section 64 of the 1961 Act are different from the wordings of Section 16 of the 1922 Act, and that it is now not open to the assessee to contend that the word 'individual' as occurring in Section 64 is confined to a male of the species only. It was, however, urged that the word 'individual' would not include a widow though it may include a husband or wife, and therefore the income of the minor son could not be added to the income of his widowed mother. This argument did not find favour with the Appellate Tribunal and the Tribunal upheld the inclusion of the income of the minor sons in the income of the assessee. The assessee, thereafter, made an application for referring a question of law to the High Court for its opinion. The Tribunal found that inasmuch as a question of law did arise in the case, it referred the following question for the opinion of this court:

' Whether the assessee being a widow, on the facts and circumstances of the case, the share income of her two minor sons from the firm in which the assessee is also a partner was rightly included in the assessment of the assessee under the provisions of Section 64(ii) of the Income-tax Act '

2. Section 64 of the Act runs as follows :

' In computing the total income of any individual there shall be included all such income as arises directly or indirectly-

(i) to the spouse of such individual from the membership of the spouse in a firm carrying on a business in which such individual is a partner;

(ii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm in which such individual is a partner;

(iii) subject to the provisions of Clause (i) of Section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart;

(iv) subject to the provisions of Clause (i) of Section 27, to a minor child, not being a married daughter of such individual, from assets transferred directly or indirectly to the minor child by such individual otherwise than for adequate consideration ; and

(v) to any person or association of persons from assets transferredotherwise than for adequate consideration to the person or association ofpersons by such individual, to the extent to which the income from suchassets is for the immediate or deferred benefit of his or her spouse or minorchild (not being a married daughter) or both.

Explanation.--For the purpose of Clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and, for the purpose of Clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater ;.....'

3. The wordings of Section 64 of the Act make it abundantly clear that the word ' individual ' as used in the main clause of Section 64 is intended to cover both males and females of the species. The decision of the Supreme Court in Sodra Devi's case, which interpreted the provisions of Section 16 of the 1922 Act, is not applicable to the interpretation of Section 64 of the 1961 Act. The learned counsel for the assessee did not contend that, even after the change made in the law, in the year 1961, the word 'individual', as used in Section 64 of the 1961 Act, should be restricted to an 'individual' who is a male of the species only. He, however, argued that the words 'such individual' as used in Sections 64(i) and 64(ii) should be given the same meaning. The 'individual' contemplated in Section 64(i) is an 'individual' who has a spouse and therefore in sections 64(ii) also the individual should be such who has a spouse. According to him it is only when a minor child of an ' individual' who has a spouse is admitted to the benefits of the partnership firm that the income of the minor child can be added to the income of that individual. Since a widow has no spouse she is not such an individual referred to in Section 64(ii) and therefore the income of her minor son, admitted to the benefits of a partnership firm, cannot be added to her income.

4. We are unable to accept this argument raised by the learned counsel for the assessee. Section 64 aims at providing for such contingencies where the income of someone can be added in computing the total income of another individual which on the wordings of the section cannot be confined to the male of the species only. It therefore follows that in contingencies contemplated by Section 64, income derived directly or indirectly by certain classes of persons can be added to the total income of an individual, whether he be a male or a female. The circumstances referred to in Clauses (i) to (v) in Section 64 are independent of each other and it cannot be argued that for the purposes of Clause (ii) of Section 64 the 'individual' whose total income is to be computed should be situated in the same circumstances as in Section 61(i), There is nothing in Section 64(ii) to indicate that the word ' such Individual ' has been used in the sense as an individual situated in the circumstances covered by Clause (i) only, i.e., a person who has a spouse living at the time. Read with the opening words of Section 64, the words 'such individual' as used in Clauses (i) and (ii) of thesection, merely mean an individual whose total income is to be computed, whether that individual be a male or a female. A widow certainly would be an individual covered by the opening words of Section 64 of the Act. Clause (ii) provides that in computing her total income, there shall be included all such income as arises directly or indirectly to her minor child from the admission of the child to the benefits of the partnership in a firm in which she is a partner.

5. We are therefore of opinion that the income-tax authorities were right in holding that income derived by a minor child because of his admission to the benefits of a partnership firm in which his widowed mother is also a partner can be added in the income of the widow while computing her total income.

6. We therefore answer the question referred to us in the affirmative and in favour of the Commissioner of Income-tax.

7. The assessee shall pay costs of this reference, which we assess at Rs. 200.


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