1. These appeals raise an interesting question as to whether a married daughter could be considered to be a minor child of the assessee for the purpose of Section 64(1)(iii) of the Income-tax Act, 1961 ('the Act').
2. The assessee is an individual. His daughter born on 14-8-1961 was a minor in the previous years ended on 31-3-1977 and 31-3-1978 corresponding to the assessment years 1977-78 and 1978-79 respectively.
She had been admitted to the benefits of a firm and her income had been included in the total income of the assessee in the earlier assessment years. But the assessee claimed that in respect of these two assessment years, since she had been married, the income accruing to her no longer be included in the total income. The ITO rejected this contention by pointing out that a married daughter is not excluded from the operation of Clause (Hi) when contrasted with clauses (iv) and (v) of Section 64(1), where a married daughter is excluded. He also relied on the decision of the Kerala High Court in the case of Kumaraswamy Reddiar v.CIT  49 ITR 687 and added back the amount. This was confirmed by the AAC.3. In the further appeal before us, it was contended on behalf of the assessee that in the context of Section 64(1)(iii), a married daughter could not be considered to be a minor child of the assessee as she was no longer a member of the assessee's family but had married into another family. Reliance was placed on the decision of the Madras High Court in the case of Ethilavulu Ammal v. Pethakkal 1981 MLJ 76. It was also pointed out that the assessee was no longer a guardian of the married daughter and hence there was no nexus between the assessee and the married daughter by reason of which income arising to her could be added to the income of the assessee. On the other hand, it was contended on behalf of the revenue that there was no room for any speculation when the words in the section were clear that the income of a minor child had to be added and a married daughter did not cease to be a minor child of the assessee, simply because she was married. It was also submitted that the fact that other items in the same section excluded married daughters showed that there was no intention to exclude married daughters from the scope of the expression 'minor child' in Section 64(1 )(iii). It was contended that in the circumstances, the addition should be sustained.
4. On a careful consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed. A historical perspective of the legislation relating to the inclusion of the income arising to minor children in the total income of the assessee is required to appreciate the question raised in these appeals. The Income-tax Enquiry Commission, 1936 had observed : There is also a growing and serious tendency to avoid taxation by the admission of minor children to the benefits of partnership in the father's business. Moreover, the admission is, as a rule, merely nominal, but being supported by entries in the firm's books, the Income-tax Officer is rarely in a position to prove that the alleged participation in the benefits of the partnership is unreal. There is the genuine case which is intended to be relieved by the Income-tax (Second Amendment) Act, 1933, and the question arises as to the nature and extent of the restriction, which will exclude from relief only the case in which a father is attempting to obtain an allowance for what is, in effect, merely the cost of maintenance of his children. We suggest that the income of a minor should be deemed to be the income of the father (i) if it arises from the benefits of partnership in a business in which the father is a partner, or (ii) if, being the income of a minor other than a married daughter, it is derived from assets transferred directly or indirectly to the minor by his or her father or mother, and (Hi) if it is derived from assets apportioned to him in the partition of a Hindu undivided family.
The Parliament, therefore, enacted Section 16(3) of the Indian Income-tax Act, 1922 ('the 1922 Act') adopting the above suggestion of the Commission. The same provision was re-enacted as Section 64 of the 1961 Act. The provision was that the income arising to a minor child from benefits of partnership in a firm in which the assessee was a partner was to be included in his total income. In the case of income arising from assets transferred directly or indirectly or income arising from another person from assets transferred directly or indirectly for the benefit of a minor child not being a married daughter such income was also to be included. As will be apparent from a comparison of the two situations, the question of excluding a married daughter in item 3 with regard to the benefits of admission to a partnership did not arise at that time because there was a condition that such benefits will be added only if the assessee is also a partner of the firm. The Supreme Court has explained in the case of CIT v.Manilal Dhanji  44 ITR 876 that "this sub-section aims at foiling an individual's attempt to avoid or reduce the incidence of tax by transferring his assets to his wife or minor child or admitting his wife as a partner or admitting his minor child to the benefits of a partnership in a firm in which such individual is a partner". Since there was a clear nexus between the benefits of partnership arising to the minor daughter and the membership of the assessee in the very firm from which the benefits were derived and the purpose of the legislation as explained by the Supreme Court, it did not matter whether the minor daughter was married or not. That is why in the case of Kumaraswamy Reddiar (supra) where both the husband and the father were members of the firm in which the minor girl was admitted to the benefits of partnership the question was only whether the income should be added to the total income of the father or the husband and not whether it could not be added to the income of the father at all. The Kerala High Court resolved the issue by pointing out that admission to the benefits of partnership did not amount to membership of the firm and the inclusion of the income of the spouse to the income of the assessee was required only when the spouse also was a member of the firm and since the minor daughter was admitted only to the benefits of partnership, her income could be added only to that of her father.
5. But, by an amendment made by the Taxation Laws Amendment Act, 1975 with effect from 1-4-1976, the words 'in which such individual is a partner' were omitted from Section 64(1)(iii). The section as it stands for the relevant assessment year is to authorise the inclusion of income arising directly or indirectly 'to a minor child of such individual from admission of the minor to the benefits of partnership in a firm'. Therefore, the question arises as to whether in the altered circumstances where the assessee need not be a member of the firm, the benefits of partnership arising to his married minor child could still be added to his total income. This leads us to the consideration of the meaning of the expression 'minor child'. The word 'child' can have different meanings in different contexts. Normally under the Indian Majority Act, 1875, the period of nonage is 18 years and, therefore, a person cannot be considered to be a child if he has attained the age of majority. But, in a purely domestic context it may happen that even an old man of 70 may be considered to be a child by his mother of 90.
Again, for the purpose of the Children (Pledging of Labour) Act, 1933, 'child' means a person who is under the age of 15 years. More to the context, in the Child Marriage Restraint Act, 1928, a child is meant a person who if a female is under 15 years of age and now one who is below 18 years. The word 'child' has not been defined in the Act and, therefore, we may have to take the meaning from the phrase 'minor child' which points to a person of less than 18 years. But, at the same time, the word 'minor' necessarily implies guardianship. Under Section 6 of the Hindu Minorities and 'Guardianship Act, the natural guardian of the Hindu minor in the case of a married girl is the husband and not the father. Therefore, we have a situation now in which though biologically the married daughter can be considered to be a minor child of the assessee, her relationship as a minor with a guardian is only with her husband and the assessee-father has no control over her person or property. The Supreme Court has held in the case of CIT v. Prem Bhai Parekh  77 ITR 27 that Section 16(3) of the 1922 Act, analogous to the present Section 64, creates an artificial income and it must receive a strict construction. As we saw earlier, at a time when the condition of the father also being a partner in the firm was present in the section, his guardianship of the minor was not so relevant. But, in the altered section where the income of the minor is to be added notwithstanding that the assessee is not a partner of the firm, only his guardianship of the minor child can present the necessary nexus for fulfilling the object and intention of the section. If, as we have found, by reason of the minor child being married, the assessee-father has lost control of her person and property, there would be no material to say that there is any attempt to avoid or reduce the incidence of tax by admitting that minor child to the benefits of partnership in the firm. Therefore, in the context of Section 64 and keeping in view the intention and purpose of that section, we are convinced that the expression 'minor child' can no longer include a married daughter. The revenue relied on the fact that the married daughter has been specifically excluded from the other items in the same section. But, this is a historical accident as noted above. When the section was originally enacted as pointed out earlier there was no need to exclude a married daughter whereas by reason of the metamorphosis in the section, the content of the expression 'minor child' has assumed significance. In the context of this situation, we find it difficult to enlarge the scope of the expression 'minor child' of such individual to include a daughter who is married to another family and who is under the guardianship of her husband, so as to include income arising to her, in the total income of her father-assessee who has no control over her person or property. We, therefore, accept the contention of the assessee that the income arising to his married daughter, though a minor, cannot be added to his total income under Section 64(1)(iii).
The ITO is directed to recompute the total income of the assessee by excluding the income arising to the married daughter of the assessee.
The appeals are allowed.