Section 17 - Amendment of section 64 - Direct Tax Laws (Amendment) Act, 1987

17. Amendment of section 64. In section 64 of the Income-tax Act, in sub-section (1),- (a) clause (i) shall be omitted; (b) in clause (ii), for the proviso, the following proviso shall be substituted, namely :- Provided that nothing in this clause shall apply in relation to any such income arising to the spouse from a firm carrying on any such profession as is referred to in sub-section (1) of section 44AA, where the spouse possesses any technical or professional qualification in the nature of a degree or diploma of a university within the meaning of clause (c) of the explanation below sub-section (2B) of section 32A; ; (c) clause (iii) shall be omitted; (d) in clause (iv), the words, brackets and figure in a case not falling under clause (i) of this sub-section, shall be omitted; (e) in clause (v), the words, brackets and figures in a case not falling under clause (iii) of this sub-section, and the brackets and words (not being a married daughter) shall be omitted; (f) in clause (vii), the brackets and words (not being a married daughter) shall be omitted; (g) for Explanation 1, the following Explanation shall be substituted, namely :- Explanation 1.- For the purposes of clause (ii), the individual, in computing whose total income the income referred to in that clause is to be included, shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and where any such income is once included in the total income of either spouse, any such income arising in any succeeding year shall not be included in the total income of the other spouse unless the Assessing Officer is satisfied, after giving that spouse an opportunity of being heard, that it is necessary so to do. ; (h) Explanation 1A and Explanation 2A shall be omitted; (i) for Explanation 3, the following Explanation shall be substituted, namely :- Explanation 3.- For the purposes of clauses (iv), (v) and (vi), where the assets transferred directly or indirectly by an individual to his spouse or minor child or son s wife or son s minor child (hereafter in this Explanation referred to as the transferee ) are invested by the transferee,- (i) in any business, such investment being not in the nature of contribution of capital as a partner in a firm or, as the case may be, for being admitted to the benefits of partnership in a firm, that part of the income arising out of the business to the transferee in any previous year, which bears the same proportion to the income of the transferee from the business as the value of the assets aforesaid as on the first day of the previous year bears to the total investment in the business by the transferee as on the said day; (ii) in the nature of contribution of capital as a partner in a firm or, as the case may be, for being admitted to the benefits of partnership in a firm, that part of the interest receivable by the transferee from the firm in any previous year, which bears the same proportion to the interest receivable by the transferee from the firm as the value of the investment aforesaid as on the first day of the previous year bears to the total investment by way of capital contribution as a partner in the firm as on the said day, shall be included in the total income of the individual in that previous year. .