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2023 (4) TMI 393 - HC - Income TaxClubbing of minor's Income to parents income - income (interest on fixed deposits) accruing to a minor - whether tax at source cannot be deducted in respect of the interest income accruing on the fixed deposit under the provisions of the Income Tax Act, 1961? - HELD THAT:- Income accruing or arising in the hands of a minor child will be added to the parent's total income. Exceptions are provided only if income arises or accrues to the minor child on account of any manual work done by him or any activity involving application of his skill, talent or specialized knowledge and experience. The Income Tax Act, does not exempt the interest income accruing to 2nd petitioner on an amount received as part of death benefits of her deceased father even if, by order of Court, that income can be utilized only after the minor attains majority. The contention that the income can be taxed only after the minor attains majority cannot be accepted, as the income has accrued, on the bank crediting the account of the 2nd petitioner every year with the amount of interest payable. The ground of extreme hardship to the 1st petitioner if she is required to pay tax on the income accruing to the minor is no ground to hold that the income cannot be clubbed with that of the 1st petitioner. Harshness in a statutory provision is no ground to hold that it should not be applied in a given case. If this income were to be taxed only after the 2nd respondent attains majority, the financial burden on the 2nd petitioner when she attains the age of majority will be huge. Moreover it would be practically impossible to get the credit of the tax deducted at source, by the bank in the year in which the minor attains majority. Further the financial hardship to the 1st petitioner does not appear to be so great as projected in the writ petition. The tax deducted at source by the 3rd respondent bank as per section 194 A (10%) will be available as credit, (Rule 37BA of the Income Tax Rules, 1962). The benefit of threshold exemption is also available. The provisions of Sections 5 of the Act have no relevance in determining the questions raised. The 2nd petitioner is a minor. Therefore, the question of her following a “...system of accounting regularly employed by the assessee” does not arise for consideration. WP fails.
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