COMMISSIONER OF INCOME TAX v. J. RAMASWAMY.
Tax Case No. 446 of 1994, decided on February 19, 1999.
HIGH COURT OF MADRAS
section V. Subramanian, for the Applicant : P. P. section Janarthanaraja, for the Respondent
R. JAYASIMHA BABU, J. :
The question referred to us at the instance of the Revenue is as to whether the share income of the minors who are beneficiaries of the trust which is a partner in the firm cannot be clubbed in the hands of the assessee under section 64(1) (iii) of the IT Act.
2. The question itself is badly framed. That any benefit has been received by the minors is not the finding of the Tribunal. The Tribunal has held that under the terms of the trust deed, the benefit to be given to the minor children is not during the period of their minority but only after they attain the age of majority.
3. Learned counsel for the Revenue contended that Expln. 2A to section 64 has been lost sight of by the Tribunal. That Explanation reads thus :
“For the purposes of cl. (iii), where the minor child of an individual is a beneficiary under a trust, the income arising to the trustee from the membership of the trustee in a firm shall, to the extent such income is for the benefit of the minor child be deemed to be the income arising indirectly to the minor child from the admission of the minor to the benefits of partnership in a firm.”
4. The Supreme Court in the case of CIT vs. M. R. Doshi (1995) 211 ITR 1 (SC) : TC 42R.571 has held that in case of deferred benefit beyond the period the minority payment made after the erstwhile minors have attained the age of majority, section 64 had no application, and such deferred benefit shall not be included in the total income of the assessee.
5. What was stated in the context of section 64 (v) also applies to section 64 (1)(iii) r/w Expln. 2A. The object of section 64 insofar as it relates to minor child in several sub-clauses in which references are made to minor child is to club the benefit received directly or indirectly during the period of minority with the income of the parents.
6. There is no error in the view of the Tribunal on the facts of this case that there could be no clubbing. The question referred to us is answered in favour of the assessee and against the Revenue.