Punjab & Haryana H.C : Clubbing of minor income with income of parent whose income was greater is legal and does not suffer from any legal disability

High Court Of Punjab And Haryana

Anju Mehra vs. CIT-I, Amritsar

Section : 64

Rajive Bhalla And Dr.Bharat Bhushan Parsoon, JJ.

IT Appeal Nos. 99, 100, 252 & 254 Of 2003

July  2, 2013

ORDER

Rajive Bhalla, J. – By way of this Order, we shall dispose of IT Appeal No.99 of 2003, IT Appeal No.252 of 2003, IT Appeal No.254 of 2003 and IT Appeal No.100 of 2003 as they involve adjudication of a similar question of law. For the sake of convenience, facts are being taken from Income Tax Appeal No.99 of 2003.

2. Challenge in this appeal is to an order passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, affirming the clubbing of interest income earned by minors Raghav Mehra and Varun Mehra with the income of their mother-Anju Mehra.

3. Counsel for the appellant submits that Income Tax Authorities are not justified in clubbing the income of minors with the income of their mother by invoking Section 64(1A) of the Income-tax Act, 1961 (hereinafter referred to as ‘the 1961 Act’). It is further submitted that the 1961 Act, does not permit the clubbing of individual income of a minor and even otherwise, Section 64(1A) of the 1961 Act has wrongly interpreted.

4. Counsel for the revenue submits that when the appellant, filed her income tax return, she filed an application that she has not included the income of minors in her income as Section 64(1A) is illegal. The appellant filed CWP No.13510 of 2003, challenging the vires of Section 64(1A) of the 1961 Act. The writ petition was dismissed on 22.03.2012. The appellant filed review application No.CW-235/2012 which was also dismissed on 18.05.2012.

5. We have heard learned counsel for the parties, perused the impugned order and the paper book.

6. The Income Tax Officer, Amritsar clubbed the income of the minors with the income of their mother Smt. Anju Mehra in stead of clubbing it with the income of the father on the ground that the mother’s income is higher. Aggrieved by this order, the appellant filed an appeal which was dismissed on 07.02.1995. The appellant, thereafter, approached the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar by way of another appeal which was dismissed on 28.11.2002.

7. A perusal of the grounds of appeal and due consideration of arguments addressed, reveal that the only question of law is the legality/validity of Section 64(1A) of the 1961 Act which reads as follows :—

“(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child :

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.

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 ay such income is once included 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.”

8. The question as to legality/vires of Section 64(1A) of the 1961 Act has been answered in CWP No.13510 of 2003 Anju Mehra v. Union of India, decided on 22.03.2012, a petition filed by the appellant by holding that Section 64(1A) of the 1961 Act is, ultra vires thereby holding that the power conferred under Section 64(1A) to club the minors income with income of the parent whose income is greater is legal and does not suffer from any legal disability.

9. The question of law having already been answered against the appellant in Anju Mehra case (supra) decided on 22.03.2012.

The appeal is dismissed.

[Citation : 357 ITR 416]