Pat) Of 1997 v. Sr. Standing Counsel

MISC. APPEAL No.161 OF 2000 (Against the order dated 27.10.1999 passed by Income-Tax Appellate Tribunal, Patna Bench, Patna in ITA No. 96(Pat) of 1997.) ------- COMMISSIONER OF INCOME TAX & Anr. ------Appellant Versus PRAMOD KUMAR JHUNJHUNWALA -------Respondents ------------- For the Appellant : Mr. Harshwardhan Pd. Sr. Standing Counsel Mrs. Archana Sinha, Jr. Standing Counsel For the Respondent : None. P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASADTHE HON’BLE DR. JUSTICE RAVI RANJAN. Prasad & Ranjan :JJ. This appeal has arisen out of an order dated 27[th] of October, 1991 passed by the Patna Bench of the Income-Tax Tribunal in I.T.A. No. 96(Pat) of 1997. Short facts giving rise to the present appeal are that the assessee-respondent filed return of income on 31.7.1995 for the assessment year 1995-96 disclosing total income of Rs. 4,63,640/- which was inclusive of income of minor children. The assessee had claimed total deduction is Rs. 40,000/- under Section 80L of the Income-Tax Act each @ Rs. 10,000/- for himself and for his three children. The Assessing Officer while processing the return of the income under Section 143(1)(a) of the Income-Tax Act (hereinafter referred to as the “Act”) allowed deduction to the tune of Rs. 10,000/- only under Section 80L of the Act, relatable to the assessee alone. Aggrieved by the same, assessee preferred appeal before the Commissioner of Income Tax (Appeal). The Commissioner remitted the matter back to the Assessing Officer, inter alia observing that the Assessing Officer committed error in not allowing the deduction under Section 80L of the Act in respect of three children. Revenue, aggrieved by the same preferred appeal before the Patna Bench of the Income-Tax Tribunal which affirmed the order of the Commissioner. Aggrieved by the same, the Revenue has preferred this appeal under Section 260A of the Act. By order dated 3.9.2003, the appeal was admitted on the following substantial question of law: “Whether in view of the provisions contained in Section 80L read with Section 64 (1A) of the Income-Tax Act deduction of 40,000/- was permissible in case of assessee and his three minor children or not” ? Mr. Harshwardhan Prasad appears on behalf the appellant. Despite service of notice, nobody has chosen to appear on behalf of the assessee-respondent. Mr. Prasad, contends that under Section 64 (1A) of the Act, income of individual shall include the income of minor children and after it is so included, deduction under Section 80L shall be available to the person only, in whose income, the income of minor has been included. Accordingly, he submits that only the assessee was entitled for deduction under Section 80L of the Act to the extent of Rs. 10,000/- and not in respect of the three minor children. The aforesaid submission necessitates examination of Section 64(1A) of the Act, same reads as follows: Income of Individual to include income of spouse, minor child, etc. xx xx xx (1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child, not being a minor child suffering from any disability of the nature specified in section 80U: Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any – (a) manual work done by him; or (b) activity involving application of his skill, talent or specialized knowledge and experience. talent or specialized knowledge and experience. Explanation. – For the purposes of this sub-section, the income of the minor child shall be included, - (a) where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any – (a) manual work done by him; or (b) activity involving application of his skill, talent or specialized knowledge and experience. talent or specialized knowledge and experience. Explanation. – For the purposes of this sub-section, the income of the minor child shall be included, - (a) where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or (b) where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year, and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.]” From a plain reading of the aforesaid provision, it is evident that it is for the purpose of income-tax in the income of the father, the income of minor children shall be included. This provision shall not make the income of the minor children as that of the income of the Patna High Court, Dated, 8[th ]Sept.2008 NAFR/S.Ali father. In our opinion the income of the children shall be the income of the father, only for the purpose of computation. Once it is held so before computing the income of the children, deductions admissible to them, have to be deducted. In that view of the matter, deductions sought by the assessee for the three minor children was rightly allowed by the Tribunal. In fairness to Mr. Prasad, he points out that minor could have separately filed the return and in that case they would have been entitled for deduction. If that be so then there does not seem any justification, not to allow such deduction when minors’ income is added in the income of the father for computation. We are of the opinion that the assessee was entitled for deduction of total sum of Rs. 40,000/- under Section 80L of the Act. In the result, we do not find any merit in the appeal and it is dismissed accordingly but without any order as to costs. (Chandramauli Kr. Prasad, J.) (Dr. Ravi Ranjan, J.)