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Ganji Krishna Rao Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Hyderabad
Decided On
Judge
Reported in(1986)15ITD209(Hyd.)
AppellantGanji Krishna Rao
Respondentincome-tax Officer
Excerpt:
.....hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of april, 1981, exceeds rs. 12,000.what we have to see is whether any member of the huf has a total income which exceeds rs. 12,000. it is not disputed that the karta's wife is a member of the huf. what is submitted is that she does not have income exceeding rs. 12,000. her own income is only rs. 5,730. the share given to the minor son admitted to the benefits of partnership amounted to rs. 1,03,315. by the addition of this amount under section 64, the income has exceeded rs. 12,000. since the income of the wife of the karta without the inclusion of the income of the minor son is below rs. 12,000, it.....
Judgment:
1. This is an appeal by a HUF against the action of the ITO assessing it at the higher rate applicable to the HUFs where one of the members has taxable income.

2. The assessee-family consists of the karta Shri Krishna Rao, his wife and the minor daughter. The karta has two other children who are also minors, but there had been a partial partition between the karta and the two minor children. One of the minor children who is now separated is a partner in a firm in which the karta's wife is also a partner. In the assessment of the karta's wife, the income arising to the separated minor son has been included under Section 64 of the Income-tax Act, 1961 ('the 1961 Act').

3. In deciding the rates to be applied in assessing the assessee-HUF the ITO was of opinion that since one of the members, i.e., karta's wife also has assessable income after the inclusion of the minor son's income under Section 64, the higher rate of tax will be applicable.

This was confirmed by the Commissioner (Appeals).

4. The assessee is on further appeal before us. It was submitted by Shri Anandkumar that for the purpose of sub-paragraph II of Part I of the First Schedule to the Finance Act, 1981, the member of the HUF should have separate and independent income of his own. Only then will the higher rates prescribed in sub-paragraph II of Part I of the First Schedule will be applicable. In support of this contention, he referred to the speech of the Finance Minister while introducing the Finance Bill, 1981. He also submitted that as per the Supreme Couft decision in K.P. Varghese v. ITO [1981] 131 ITR 597 a reference could be made to: the speech in order to understand the purpose for which the provision was enacted. He also submitted that if there is any doubt, that doubt has to be resolved in favour of the assessee.

5. We are unable to accept his submission. Sub-paragraph II of Part I of the First Schedule referred to reads as under: In the case of every Hindu undivided family which at any time during the previous year has at least one member whose total income of the previous year relevant to the assessment year commencing on the 1st day of April, 1981, exceeds Rs. 12,000.

What we have to see is whether any member of the HUF has a total income which exceeds Rs. 12,000. It is not disputed that the karta's wife is a member of the HUF. What is submitted is that she does not have income exceeding Rs. 12,000. Her own income is only Rs. 5,730. The share given to the minor son admitted to the benefits of partnership amounted to Rs. 1,03,315. By the addition of this amount under Section 64, the income has exceeded Rs. 12,000. Since the income of the wife of the karta without the inclusion of the income of the minor son is below Rs. 12,000, it is submitted that the provisions of sub-paragraph II of Part I of the First Schedule will not be applicable.

6. So the real issue is what is meant by the total income of the previous year which expression is found in sub-paragraph II of Part I of the First Schedule. Now, the total income referred to is the total income computed as per the 1961 Act. It will not be referring to any other total income. Now in computing the total income, Section 64 very clearly states that income of minor children is includible. The definition of total income given in Section 2(45) of the 1961 Act means the total amount of income computed in the manner laid down in this Act which includes Section 64. Therefore, there can be no manner of doubt that the total income referred to in sub-paragraph II of Part I of the First Schedule includes the income under Section 64 also.

7. We can derive support for this proposition from the decision of the Andhra Pradesh High Court in the case of CIT v. G. Gopal Rao 1985 Tax LR 273. They have quoted the Supreme Court decision in the case of CIT v. Smt. P.K. Kochammu Amma [1980] 125 ITR 624 where it is stated by their Lordships: ...The total income of the assessee chargeable to tax would include the amounts representing the shares of the spouse and minor child in the profits of the partnership.... (p. 278) ...In the first place, the income although derived by his minor children is held to be 'his income' and an obligation is imposed on the assessee under Section 139(1) of the Act to declare such income in the return filed by him.... (p. 279) It will be apparent from the above that there is no manner of difficulty at all in holding that the total income for the purpose of the Finance Act also includes income under Section 64. Now, Shri Anandkumar had referred to the Finance Minister's speech. No doubt, Finance Minister's speech can be referred to where there is some ambiguity in interpreting a particular provision of the section. Where there is no such ambiguity and where the term to be construed as defined by the Act itself, there is no need for going into the Finance Minister's speech. Further, since there is no difficulty in interpretation, there is no question of arriving at an interpretation which leaves the assessee with lesser burden.


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